By: Bernadette Starzee, Long Island Business News

POSTPONED, New DATE TBD

November 17, 2015

Tax Update
Presented by Thomas Terry, CPA

Join us as Thomas Terry, of Markowitz, Fenelon & Bank discussing the  latest developments on federal and New York taxation, including techniques and tax planning ideas – perfect for business owners getting ready to wrap up the year.

Topics include:

• Net Investment Income Tax
• Affordable Care Act – what it means to the employer and employee
• Proposed legislation, including new equipment regulations
• Same sex couple developments

EVENT DETAILS:

8:30am – 9:00am
Arrival and Breakfast

9:00am – 9:45am
Presenting Speaker

9:45am – 10:00am
Q&A and Discussion

REGISTRATION: All events are FREE but registration is required. Complimentary breakfast will be served.

LOCATION: CMM’s Bridgehampton office, 2495 Montauk Highway, Bridgehampton

By Christine Malafi

With all of the recent news coverage regarding the Ebola outbreak and its entry into the United States, employers need to be prepared to answer related questions and handle related issues. The CDC has stated that the 2014 Ebola epidemic is the largest in history, affecting multiple countries in West Africa, and advises of the specific symptoms and dangers of Ebola.1

1. Employers should be aware of the OSHA and CDC guidance available, and should communicate with employees and customers to reaffirm that health and safety concerns are taken very seriously and that all legal actions will be taken to protect them. OSHA has specific guidelines, based on the CDC recommendations, for healthcare workers, airline and travel industry personnel, mortuary workers, lab workers, border and custom workers, emergency responders, and critical sector employees (transportation, pharmacists, etc.) which should be reviewed by employers of those workers.
2. The following are some steps which may and may not be taken to protect employees, customer, and the public, depending upon the circumstances: 1. Consider work-related travel destinations and require only absolutely necessary business travel to affected geographical areas. 2. Ask employees about travel plans. If an employee intends to travel to a place where they may potentially be exposed to Ebola, then an employer may ask whether the employee had contact with any infected persons, and whether the employee is experiencing any symptoms.
3. The questions should be limited to avoid inquiry which would require revelation of a disability and violate the Americans with Disabilities Act (ADA).
4. If an employee has been exposed to Ebola, an employer cannot impose quarantine.
5. Remind all employees of basic practices which are important during the winter flu season (i.e., washing hands often, getting a flu shot, etc.).
6. Notify employees of potential hazards of Ebola.
7. Provide employees with reasonable means to abate the hazards of Ebola. If there is a real fear of contracting Ebola in the workplace, fearful employees may be protected if they refuse to work, and legal counsel should be obtained to help to deal with such a refusal.

If you have any further questions or concerns about the information contained in this Advisory you should not hesitate to contact us.

1 United States Centers for Disease Control and Prevention, www.cdc.gov/vhf/ebola. 2 United States Department of Labor, Occupational Safety & Health Administration, Ebola Control and Prevention, www.osha.gov/SLTC/ebola/control_prevention.html.

By Christine Malafi

Last month, the Equal Employment Opportunity Commission (EEOC) issued its written Enforcement Guidance on Pregnancy Discrimination and related issues. The Guidance, provided in the context of the Pregnancy Discrimination Act (PDA) and the Americans with Disability Act (ADA), supersedes the EEOC’s prior writings from 1983 and 1991, and applies to all employers with more than fifteen employees.

During the last 16 years, pregnancy discrimination charges filed with the EEOC have substantially increased—3,900 such charges were filed in 1997 and 5,342 such charges were filed in 2013. Discrimination is usually based on unfounded beliefs that pregnant women are not physically capable of working or that working may harm a fetus. The EEOC has clearly stated that employees cannot be discriminated against because they are, may be, intend to be, or were pregnant. Promotions cannot be denied to an employee because she may become pregnant in the future. Pregnant employees cannot be excluded from performing job duties (i.e., handling certain chemicals) out of an employer’s fear that the fetus may be harmed. Further, the same parental leave policies must be available to both male and female employees.

Pregnancy-related conditions may be disabilities under the ADA, and will require the granting of reasonable accommodation, such as granting more frequent breaks, keeping a bottle of water nearby, using a stool, modifying work schedules to accommodate morning sickness, and/or altering how job functions are performed. While a “normal” pregnancy does not constitute a disability under the ADA, it is a serious health condition under the Family Medical Leave Act (FMLA), entitling a pregnant employee to FMLA leave. The EEOC Guidelines address the “middle” ground, and state that employers must reasonably accommodate a pregnant employee with light duty or modified assignments, even when there is no pregnancy-related condition which can be considered a disability. This is a controversial issue, one that is pending before the United States Supreme Court, in the case of Young v. United Parcel Service, a case where a pregnant worker was denied light duty assignment because her doctor told her not to lift heavy packages. She claims that UPS told her that light duty was only available to employees with job-related injuries or to those disabilities recognized under the ADA.

Additionally, the new Guidelines find both breast-feeding and lactation are pregnancy-related medical conditions for which employees must be permitted to address in the same way as other limiting medical conditions. Therefore, an employer whose policies permit schedule changes or use of sick leave to attend doctor appointments or to address medical conditions must permit employees to utilize those policies for breast-feeding and lactation issues.

As before issuance of the Guidelines, an employee’s pregnancy, childbirth, or related medical condition cannot be a motivating factor in an adverse employment action. Employment policies should not include any policy that treats pregnant workers less favorably or demonstrates pregnancy bias. Policies should not more favorably treat employees (of either sex) who are not affected by pregnancy, but who have similar ability or inability to work. The Guidelines still permit neutral employment policies or practices which do not have disparate or disproportionate impact on pregnant employees, where it may be shown that they are job related and consistent with business necessity.

While school’s out for summer, employers often hire teenagers to fill seasonal employment needs. Hiring minors comes at a price, since the law imposes numerous restrictions in their employment. As such, it is a good idea to identify and review some child labor laws applicable to employees under the age of 18.

Age Requirements & Hour Restrictions

The law restricts hours that employees under the age of 18 may work. The hours that minors can work depend on age, the type of work, and whether the minor is enrolled in school. New York State is one of the stricter states in the country when it comes to child labor laws. Below are some of the rules regarding employment of minors:

• Minors under age 14. Employers are prohibited from hiring minors under the age of 14.
• Minors aged 14 and 15. When school is not in session, minors aged 14 or 15 are allowed to work no more than 8 hours per day, 40 hours per week. From June 21 through Labor Day, minors aged 14 or 15 are allowed to work only between the hours of 7:00 a.m. and 9:00 p.m. (7:00 a.m. and 7:00 p.m. the remainder of the year). When school is in session, minors aged 14 or 15 are allowed to work no more than 3 hours per school day, 8 hours on non-school days, and no more than 28 hours per week.
• Minors aged 16 and 17. When school is not in session, minors aged 16 or 17 may work up to 48 hours per week, 8 hours a day, 6 days a week, and the permitted hours are from 6 a.m. to midnight. When school is in session, they may work no more than 28 hours per week, 4 hours per day on days preceding school days and 8 hours on Fridays, Saturdays, Sundays and holidays, 6 days per week. To work between 10 p.m. and midnight on a day before a school day, 16 and 17 year olds need written permission from a parent or guardian and a certificate of satisfactory academic standing from their school.
• All minors under age 18. Minors of any age may not work during school hours, unless they have graduated or are withdrawn from school. Home-schooled children may not work during the hours of the local public school.

There are some common exceptions to these age and hour restrictions, which include: Newspaper sales and delivery; babysitters; farm laborers; performers; and models.

Other Important Reminders

• Federal and state laws require that employers obtain age certificates from workers who are known to be under age 18 (or appear to be under age), commonly known as “working papers.”
• Employers must make a work schedule for all minors and post it where workers can see it. The schedule should show minors’ start and end hours, as well as time allotted for meals.
• Employers can change a minor’s hours of work, as long as all changes are posted on the schedule. Minors may work only on the days and at the times posted on the schedule. If minors are present at other times or if there is no posted schedule, it is a violation of child labor laws.
• Employers are required to return age certificates to their employees upon their termination so that minors are able to provide the same age certificate to future employers rather than filing a new application with the issuing agency.
• Civil penalties for violations of child labor laws are: maximum $1,000 for first violation, $2,000 for second violation, and maximum $3,000 for third and each subsequent violation. The following are some of the common jobs that are prohibited to be done by minors:
• Construction work, including wrecking, demolition, roofing, or excavating operations, and the painting or exterior cleaning of a building structure from an elevated surface.
• Any act involving the operation of power-driven woodworking, metal-forming, metal-punching, metal-shearing, bakery, and paper products machines.
• Any act involving the manufacture of brick, tile, and like products.
• As a helper on a motor vehicle.
• Any act in the care or operation of a freight or passenger elevator, except that minors over age 16 may operate automatic, push-button control elevators.

Recent media coverage has heightened employer awareness of workplace bullying. This awareness, however, has created some confusion about what, if anything, should be done to address workplace bullying, and whether harassment policies are sufficient to protect the employer. While many times the characteristics of bullying and harassment can overlap, the law relating to each of these areas is different. It important for employers to understand the differences between the two and have policies in place to identify, assess, minimize, and control the risks associated with such behavior.

Workplace bullying is often defined as repeated, unreasonable, and unwelcome behavior directed toward an employee or group of employees that creates a risk to health and safety that takes one or more of the following forms: verbal abuse, offensive conduct/behaviors (including nonverbal) which are threatening, humiliating or intimidating, or work interference which prevents work from getting done. Bullying is distinct in that it contains a health and safety component. Unlike discrimination and harassment, bullying can be directed at anyone and does not have to be related to race, color, religion, or any other protected class.

Workplace harassment, on the other hand, exists where 1) enduring the offensive conduct becomes a condition of continued employment, or 2) the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile, or abusive, and 3) the unwelcome conduct is based on race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information.

Workplace bullying creates a significant threat to the health, safety, and welfare of people in the workplace. It can also have wider implications for employers, including reduced profitability, low morale, and increased absenteeism and staff turnover. Bullying can also expose the employer to legal claims. While employers often treat bullying and harassment as similar issues, the two concepts are different and should be separately addressed in any policy an employer may have for handling these issues. It is important for employers to identify workplace bullying as a concern and minimize effect on employees.

Federal employment law does not currently address bullying in the workplace though it still poses a health and safety issue, making it an employer’s responsibility to prevent workplace bullying and to provide a safe workplace for employees. Several states have proposed laws seeking to address workplace bullying. New York’s “Healthy Workplace” bill is currently pending with New York State’s legislature. If this law is passed it would create a framework for employer responsibility as well as provide guidance on how these matters would be handled in the legal system.

While the legal framework for bullying claims is uncertain at this time, employers should use caution to minimize exposure from workplace bullying. Failure to do so can expose the employer to claims for a breach of health and safety if bullying is not properly handled. Moreover, workplace bullying can cause reduced profitability, low morale, and increased absenteeism and turnover.

Employers who seek to prevent workplace bullying should address the problem as they address complaints of legally actionable harassment. There should be separately established bullying and harassment policies in place. Make sure that employees know that the complaint process is available and that the complaints will be handled promptly and judiciously. Workplace bullying is a separate issue and should be recognizable to all involved and addressed properly. Employees should be aware that the process for handling these issues exists and that if they have complaints or have witnessed mistreatment, the employer wants to know about it and immediately correct it. Effective policies should ban bullying, providing easily understood examples of inappropriate behavior and a clear procedure to investigate and handle complaints.

If you have any further questions or concerns about the information contained in this Advisory you should not hesitate to contact us.

By Patrick McCormick

What happens when rent is prepaid under a lease but the lease is purportedly terminated prior to the expiration of the term? The Court of Appeals in Eujoy Realty Corp. v. Wagner Communications, LLC addressed this issue.1

Landlord Eujoy owned a building in Queens with a steel frame structure on the roof for the placement of billboard advertisements. Tenant Van Wagner considered the billboard desirable because of its visibility to passing traffic on the Long Island Expressway. Van Wagner leased the billboard for a 15-year term commencing December 1, 2000 and ending September 30, 2015.

The lease specifically provided for the payment of “annual basic rent” for the period January 1, 2007 through December 31, 2007 in the amount of $96,243.00 in advance on January 1, 2007. The lease further provided that “Should this Lease be terminated for any reason prior to the date of its expiration [Van Wagner] shall not be entitled to the return of… any basic rent paid in advance and covering period beyond the date on which the lease is terminated…” The lease, however, provided several exceptions to this clause and allowed the apportionment of rent if the lease terminated due to a fire or casualty, condemnation or the enactment of any law making the billboard illegal. A rider to the lease also afforded Van Wagner the right to terminate the lease if the view of the billboard from the Long Island Expressway was ever “substantially obstruct[ed]” by “the erection of a new building or the increase in height of the building between the location [of the billboard] and the [LIE].”

In early January 2007 Van Wagner sent a check for $96,243.00 to Eujoy for the annual basic rent for the entire year of 2007. The check was dated January 2, 2007; however Van Wagner almost immediately stopped payment on the check claiming that it was “accidentally” and “erroneously” issued. Shortly thereafter, on January 16, 2007, Van Wagner’s Executive Vice President wrote a letter to Eujoy’s co-owner confirming a conversation with another co-owner advising that Van Wagner had terminated the Lease effective January 8, 2007 pursuant to the Rider and enclosed a check for $2,109.43 representing rent for January 1, 2007 to January 8, 2007.

Eujoy thereafter commenced an action against Van Wagner seeking the balance of the annual basic rent for 2007 in the amount of $94,137.57 and for reasonable legal fees and costs related to Van Wagner’s default.

Eujoy quickly moved for summary judgment arguing that “[t]he parties did not stipulate to apportion rent paid in advance and for the period following termination of [the lease] pursuant to [the Lease Rider] and Article 19 of the lease entitled it to its reasonable attorneys’ fees and costs.” Van Wagner cross moved for summary judgment “based on the lease” or, alternatively, for leave to amend its answer to include an affirmative defense of estoppel.

Van Wagner submitted an affidavit of its Executive Vice President claiming that in 2006 it became apparent that construction would eventually block the visibility of the billboard from the Long Island Expressway thus entitling tenant to invoke the termination clause in the rider and that upon his discussion by telephone with Eujoy’s co-owner late in 2006, Van Wagner “agreed [to] keep the advertisements posted, and thus pay rent to [Eujoy] for as long as [Van Wagner] could collect revenues from [its] customer…” The affidavit also stated that because Eujoy “accepted the benefits of [Van Wagner’s] extended use of the [billboard] through January 8, 2007 and agreed that the Lease would terminate as of that date…it should not be entitled to collect rent for any subsequent period.”

The Supreme Court denied Eujoy’s motion and granted Van Wagner’s cross motion holding that Eujoy was not entitled to any portion of prepaid rent because Van Wagner “did not pay any such rent because [it] stopped payment on the rent check before [Eujoy] cashed it.”

On appeal, the Appellate Division, with two dissents, reversed the Supreme Court’s order, granted Eujoy’s motion for summary judgment, denied Van Wagner’s cross motion in its entirety, and remanded the matter for a determination of attorneys’ fees. After final judgment, the Court of Appeals took up the case as of right because of the two Justice dissent and affirmed.

After discussing preservation issues, the Court of Appeals addressed the prepaid rent issue. Initially the Court reminded us of the common law rule that rent “is consideration for the right of use and possession of the leased property that a landlord does not earn until the end of the rental period” unless the parties expressly agree otherwise. The Court stated “when a lease sets a due date for rent, that date is the date on which the tenant’s debt accrues” and that “[r]ent paid ‘in advance’ (i.e. at the beginning of the term) is unrecoverable if the lease is terminated before the completion of the term, unless the language of the lease directs otherwise.” The Court repeated long-standing policy of a “strong preference for freedom of contract in the creation of leases, and although it may seem harsh for tenants, the courts assume that the parties have knowingly bargained for the provisions of their agreement. This is especially true in the case of arms-length commercial contracts negotiated by sophisticated and counseled entities. [Citation omitted.] Courts will give effect to the contract’s language and the parties must live with the consequences of their agreement. If they are dissatisfied …the time to say so [is] at the bargaining table.”

In addressing the lease, the Court noted that the lease described the rent as “annual basic rent,” which it cited as confirmation of the parties’ agreement and intent that rent be paid in advance in annual installments. The Court continued that the lease explicitly states that the tenant is not entitled to “the return” of any basic rent “paid in advance,” even if the lease is terminated prior to the expiration of the rental period unless one of the lease exceptions existed. The Court noted that while tenant never fully pay the rent due January 1, 2007 because it stopped payment of its check, that did not change the lease requirement that the rent became due on January 1, 2007 and under this lease the rent could not be apportioned because the lease did not terminate based on one of the exceptions specifically enumerated in the lease.

The Court determined that Van Wagner “accrued a debt for the annual basic rent under the terms of the lease when it remained in possession of the billboard after January 1, 2007, and there is nothing in the law or the language of the agreement the relieves it of that debt.”

Thus, when a tenant agrees to the payment of rent in advance, if it wants the ability to apportion the rent if the lease terminates early, such must be specifically provided for in the lease.

¹ 22 N.Y.3d 413 (2013)