Category: Uncategorized

By Patrick McCormick

It cannot be debated that making or serving a proper rent demand under RPAPL § 711(2) is a necessary precondition to the commencement of a nonpayment proceeding. It is common practice, indeed I suspect it would not be an exaggeration to say it happens every day in every landlord/tenant court, for a landlord to make or serve a rent demand and then commence a nonpayment proceeding seeking to recover not only the rent and additional rent demanded, but also rent that accrued after the demand.

Judge Arlene P. Bluth in RCPI Landmark v. Chasm Lake Management Services, LLC, (56557/11 NYLJ 1202494916664, at *1 (Civ, NY, Decided May 9, 2011) found fault with this common practice and dismissed a nonpayment proceeding as fatally defective, because the petitioner sought to recover rent that was not demanded.

The facts in RCPI are straightforward: landlord served a rent demand on January 24, 2011, for rent due through January 2011; tenant failed to pay; landlord commenced a non-payment proceeding in February 2011, seeking the amount sought in the demand plus February 2011 rent. Respondent moved to dismiss “asserting that the petition is fatally defective because petitioner sued for February rent, which was never demanded.”

Despite recognizing that a “motion to amend the pleadings to conform to the proof should certainly be granted at the trial,” the Court nevertheless found the petition fatally defective because landlord “unilaterally sued for the February rent that was never demanded.” The Court continued: “A request to amend a petition to add rents that have accrued after service of the petition must be denied with the ability to renew upon service of the proper papers or at trial.” The Court concluded that “by unilaterally including the February rent in the petition, petitioner has attempted to circumvent the requirement of first demanding the rent. This shortcut, although common, is improper. Because the petition seeks rent that was never demanded, respondent’s motion is granted and the petition is dismissed.”

Thus, we have a clear example of elevating form over substance, especially because the initial return date of the petition is supposed to be the trial date (see, RPAPL § 745) — although that rarely occurs, in large part due to the overwhelming number of cases handled by the landlord/tenant courts. Nevertheless, it seems to be a waste of resources to dismiss a proceeding where the Court would have permitted the petition initially to include February rent if an additional demand was served and would have permitted an amendment to the petition at trial to include February 2011 rent and presumably all other subsequently accruing rent. Despite such, the Court determined that including February 2011 rent in the petition without service of an additional demand was fatally defective. There is no compelling reason for this ruling which will likely result in motion practice rendering nonpayment proceedings anything but “summary” and increased costs to the tenant if the lease requires the tenant to pay costs and fees associated with prosecuting the summary proceeding.

While additional courts will need to weigh in on this issue and hopefully there will be guidance from an appellate court, the simple lesson here is that if you represent a landlord, do not seek rent in a nonpayment proceeding if the rent has not been previously demanded.

Another recent proceeding in which a Court dismissed the petition based on a “defective” rent demand is JLNT Realty LLC v. McKenzie, 56518/2011, NYLJ 1202508287984, at *1 (Civ., KI, Decided, July 19, 2011). In JLNT , the Court dismissed the nonpayment petition where the amount sought in the rent demand was almost double the amount alleged due and sought in the petition.

In JLNT Realty, the landlord’s rent demand sought 2 month’s rent that had been previously paid by the tenant upon resolution of a previous non-payment proceeding. The stipulation of discontinuance of the previous proceeding specifically recited that tenant had paid rent through September 2010, but the landlord, in a new rent demand, sought rent for August 2010, and September 2010. The petitioner “corrected this error in the subsequent petition” but the Court nevertheless dismissed the petition because the rent sought in the rent demand was “not reasonably related to the actual amount owed and therefore the demand is defective.” The Court further found the rent demand was “not made in good faith and is defective as a matter of law. The importance to the tenant of receiving an accurate demand of rent due is of paramount importance, especially in view of the consequences of non-payment.”

It is interesting to note that the Court in RCPI did not discuss the requirement that a rent demand must seek an amount reasonably related to the actual amount owed. If the demand does not need to recite the exact amount owed, why is a petition defective if it seeks some rent not demanded? I suppose the Court in RCPI would say “because the statute requires it.” This seems to put us on a slippery slope requiring exact precision and agreement between the amount recited in a rent demand and a subsequent petition. I anticipate additional motions by tenants making these arguments, resulting in additional delays in disposing of proceedings.

On August 5, 2011, the IRS finally published some guidance for executors of estates of people who died in 2010. Notice 2011-66 explains how these executors can opt-out of the estate tax, and Revenue Procedure 2011-41 explains the special tax rules that apply to assets when executors opt-out of the estate tax.

The estate tax and the Generation-Skipping Transfer (GST) tax were repealed on January 1, 2010; but on December 17, 2010, President Obama signed a law that reinstated them retroactive to January 1, 2010.

This law gave people who died in 2010 a special tax break: executors of 2010 decedents can opt-out of the default estate tax rules. Under the new law, the estate tax rate in 2010 was set at 35% and the exemption was $5 million. This is the same as it now is for 2011 and 2012. This second method of estate tax has one main benefit: assets received from a decedent are generally stepped-up to fair market value under Internal Revenue Code §1014whereas if the executor chooses to opt-out, there is generally no step-up in basis.

To remain with the default estate tax rules, executors file the form they always filed for taxable estates: Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. On August 1, 2011, the IRS finally published draft instructions for Form 706. These instructions inform executors that for decedents dying after December 31, 2009 and before December 17, 2010, the due date for Form 706 is September 19, 2011.

Executors of 2010 decedents can opt-out of the default estate tax rules by filing a special form: Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent. Opting-out of the estate tax also means opting-out of the stepped-up basis rule under IRC §1014 and opting-in to the modified carryover basis rule under IRC §1022.

Carryover basis generally means that assets keep the same basis — the basis in the hands of the decedent “carries over” to the recipient. IRC §1022 modifies this carryover basis rule, because it allows executors to step-up the basis of some assets. Executors can allocate a $1.3 million step-up in basis to assets passing to any person. Executors can allocate an additional $3 million step-up in basis to assets passing either in trust or outright to a surviving spouse. In Revenue Procedure 2011-41, the IRS provides a safe harbor for making these basis allocations.

The IRS estimates that 7,000 executors of estates who died in 2010 will make the Section 1022 Election and thus will be required to file Form 8939. The big question for the executors is what was the total assets (greater than $5 million) in the estate versus what was the capital gain on those assets. If the potential estate tax is greater than the potential capital gains tax, the executor should opt-out so there would be no estate tax. Speaking to a knowledgeable accountant or trust and estates attorney should help answer that question.

Do you want to hand your heirs big tax problems? Would you like to hand the IRS a sizable chunk of your inheritance? Probably not. But if you misunderstand the rules when it comes to inherited IRAs, you just might. Here are some mistakes that IRA owners and IRA heirs often make.

1. Many clients think that a will or a trust can facilitate the transfer of IRA assets.
   IRAs don’t pass to heirs through wills or trusts (a few rare exceptions aside). The beneficiary form takes precedence. This is a form the IRA owner filled out and signed when opening the account.Problems arise when:
   • •  The IRA owner dies without designating a beneficiary;
   • •  The designated beneficiary has passed away before the IRA owner; or
   • •  No one can find the beneficiary form (not even the IRA custodian,
     i.e., the financial institution that hosts the IRA).

   In these circumstances, IRA heirs commonly end up playing by the IRA custodian’s rules. The resulting beneficiary often ends up with the IRA owner’s estate and must be paid out within five years of the owner’s death. This is usually a very undesirable tax consequence. It might be a contingent beneficiary and perhaps a very undesirable emotional consequence. The best thing to do is to keep the beneficiary form handy, keep it up to date and to let your heirs know where it is.

2. Too often, non-spousal IRA heirs see the inherited assets as money to spend.
   They withdraw the entire IRA balance as soon as it’s given to them. Unfortunately, what happens is all that money will be subject to federal income tax. Due to this move, they may lose a third of the IRA assets (or more).Instead, non-spousal beneficiaries need to open an inherited IRA to house the inherited assets and simply take Required Minimum Distributions (RMDs) from that inherited IRA under the appropriate schedule. This will allow the beneficiary to stretch the IRA over the course of his or her lifetime.With a traditional IRA the age of the original account holder is a big factor. If the original IRA owner is under age 70-1/2 and hadn’t taken any RMDs, when the beneficiary inherits the IRA, distributions must occur within five years of the original IRA owner’s death. Under this five-year rule, the entire account balance must be distributed to the beneficiary within those five years. If the account holder was over age 70-1/2 and had already taken RMDs, then the inherited IRA assets may be distributed gradually over the projected lifetime of the beneficiary according to IRS tables. If you don’t have to go by the five-year rule, the invested IRA assets may keep compounding across many years with the added benefit of tax deferral.You can also disclaim or renounce some or all of the inherited IRA assets, which could be a wise move for tax purposes if you don’t need the inherited funds.
3. When a spouse dies, the surviving spouse that inherits an IRA doesn’t review all options to choose carefully.
   Here are the options that should be considered:
   1. Roll over the assets into a beneficiary IRA. There are compelling reasons to go with the rollover. The widowed spouse can set up an RMD schedule based on his or her life expectancy. This second point is really important, because the rollover allows the surviving spouse to put off the RMDs that would otherwise soon need to happen. In fact, the surviving spouse can wait until the year in which the original IRA owner would have turned 70-1/2 to start taking required withdrawals from the IRA.
   2. Convert the inherited IRA into your own IRA. If the spouse converts the IRA into his or her own IRA, the surviving spouse can name a beneficiary for the inherited assets, keep contributing to the IRA, and potentially avoid RMDs until he or she turns 70-1/2.
   3. Take a lump sum distribution. If the widowed spouse wants to take distributions from the inherited IRA before age 59-1/2, a rollover is probably not the way to go. If that is the desire, those withdrawals will be slapped with the 10% early withdrawal penalty plus the requisite income taxes once it’s rolled over. Either way, there will still be income tax consequences to be considered.
   4. Disclaim up to 100% of the deceased spouse’s IRA assets. Or, a surviving spouse who doesn’t really need inherited IRA assets can disclaim them, meaning that they will go to the named contingent beneficiary. Sometimes this can be a wise move for tax purposes. The surviving spouse cannot direct where the IRA assets go. Disclaiming an asset acts as if you have predeceased the original owner.
4. Non-spousal heirs fail to re-title an inherited IRA.
   If this isn’t done by the year following the year in which the original IRA owner passed, then there can be no direct rollover of the inherited IRA assets and no stretch for those assets. A non-spouse beneficiary cannot roll inherited IRA assets into their own IRA. It must be re-titled as an inherited IRA. The IRS will treat those inherited IRA assets like a fully taxable cash distribution with 100% of it subject to income tax.

The bottom line is that the beneficiary must think before he or she acts in order to avoid unwanted taxes and penalties.

On September 17th 2010, New York State enacted the New York Prudent Management of Institutional Funds Act (NYPMIFA) which significantly changes the rules governing how notfor-profit organizations manage, invest and spend their endowment funds. The Act applies to all public charitable organizations, private foundations and practically every corporation formed under the New York Not-For-Profit Corporation Law. The new law provides institutions with more flexibility in spending from endowment funds giving them greater access to funds needed to support their programs and services that may be struggling due to the recent economic downturn.

NYPMIFA eliminates the historic dollar value limitation on spending, allowing institutions to dip into the original dollar value of the endowment fund as long as the governing board deems it prudent. Prior to this law, not-for-profit corporations were only allowed to spend income earned by an endowment fund (ie. interest, dividends, royalties, etc). The adoption of NYPMIFA eradicates the historic floor on spending and now allows an organization to spend endowment fund assets after considering the following eight factors; preservation of the endowment fund, purposes of the fund, general economic conditions, possible effects of inflation or deflation, total return, other resources available, the investment policy of the institution and where appropriate, alternatives to expenditure.

The Act includes a notable provision that is intended to ensure against excessive spending, creating a rebuttable presumption of imprudence if more than 7% of the fair market value of an endowment fund is spent in any one year. This 7% rebuttable presumption applies only to funds created on or after the effective NYPMIFA date, September 17, 2010. Though it’s important to note that an appropriation of less than 7% is not presumptively prudent, the institution must still take proper measures to uphold the outlined prudence standard.

The NYPMIFA standard of prudence also applies to the delegation of investment and management funds to outside professionals. The institution must exercise its duty of care and act prudently in selecting, continuing or terminating an external agent such as an investment advisor, investment manager or bank or trust company. Outside agents also owe a duty to exercise with reasonable care, skill and caution to comply with the scope of the delegation. Any contract that delegates a management or investment function must provide that the contract can be terminated at any time without penalty (with up to 60 days notice). Although not required by the Act, we recommend that an organization keep detailed records describing the nature and extent of the consideration that the governing board gave to each of these factors when making investment decisions.

Donors of endowment funds in existence before September 17, 2010, must be given the opportunity to opt out of NYPMIFA’s new spending rules. The Act requires 90 days advance notice be made to the donor, if alive and identifiable, with reasonable efforts before appropriating form the endowment fund for the first time. The notice must ask the donor to indicate whether the organization may spend as much of his or her gift as it determines is prudent or if the endowment fund must maintain the historic dollar value of the gift. The notice also must include an explanation of the potential impact that each choice would have on spending from the fund. Donor notice is not required if the gift instrument already permits spending below historic value, if it already expressly limits spending or if the donor never included a separate statement restricting funds when the donation was made.

Even prior to this law, an organization could always seek release of donor-imposed restrictions placed on management or use of funds by obtaining the written approval of the donor or seek court release with prior notice to the Attorney General. NYPMIFA now expands the situation under which an institution may seek a release or modification of a restriction on an endowment fund by allowing an institution to seek release in the court even if the donor is available. For funds of less than $100,00 or more than 20 years old organizations can release or modify restrictions without court involvement by simply giving prior notice to the donor (if available) and the Attorney General.

There are a number of steps and actions that notfor-profit entities must take to ensure their organization is in compliance with the new law. Here are a few first steps that we recommend. We would be happy to help you prepare any of the documents described below and to work with you in educating your board about these new requirements.

1. Educate your governing boards about the requirements and changes resulting from this Act. Make sure that all board directors and members are aware of the revised standards of conduct for managing and investing funds, delegating management and the new rules pertaining to donor restrictions.
2. Promptly adopt a written investment policy incorporating the standards of NYPMIFA. NYPMIFA requires organizations to adopt a written investment policy. The policy should reflect the detailed guidance on prudent investing as well as the new law’s rules on investment strategy and delegation of investment management. The creation or revisions of an organization’s policy must be sure to include the eight factor prudence standard for managing and investing, a diversification requirement, an overall investment strategy and the guideline’s for delegation of investment management.
3. Set up procedures to send out notifications to existing donors, giving them the opportunity to opt out of the new rules. As set forth in NYPMIFA, the notice must include substantially the following language:Attention, Donor: Please check box #1 or #2 below and return to the address shown above: __ #1. The institution may spend as much of my gift as may be prudent. __ #2. The institution may not spend below the original dollar value of my gift. If you check box #1 above, the institution may spend as much of your endowment gift (including all or part of the original value of your gift) as may be prudent under the criteria set forth in Article 5-A of the Not-forProfit Corporation Law (The New York Prudent Management of Institutional Funds Act). If you check box #2 above, the institution may not spend below the original dollar value of your endowment gift but may spend the income and the appreciation over the original dollar value if it is prudent to do so. The criteria for the expenditure of endowment funds set forth in Article 5-A of the Not-for-Profit Corporation Law (NYPMIFA). During the 90 day notice period, a donor may modify the gift instrument — with or without the consent of the organization — to prohibit application of NYPMIFA’s spending rules. If the donor does not respond within the 90 days, these new spending rules will apply to the gift. Organizations must keep records of the actions taken in compliance with these notice requirements.
4. Revise solicitation materials for endowment funds to include new disclosure requirements. NYPMIFA requires organizations to make the following disclosure in all solicitations for contributions to an endowment: Unless otherwise restricted by the gift instrument pursuant to paragraph (B) of Section 553 of the Not-for-Profit Corporation Law, the institution may expend so much of an endowment fund as it deems prudent after considering the factors set forth in paragraph (A) of Section 553 of the Not-for-Profit Corporation Law.

The solicitation disclosure language is designed to alert donors to the fact that unless otherwise specifically restricted by a gift instrument, the organization will be allowed to expend so much of an endowment fund as it deems prudent after considering the eight NYPMIFA prudence factors governing appropriation decisions. Accordingly, all solicitation materials for endowed funds will need to be revised to reflect this new rule, and the policy should include a statement of the rule.

As we informed you in our April 2011 newsletter, the New York Wage Theft Prevention Act (WTPA) was enacted December 2010 and became effective on April 9, 2011. As a reminder, among other new employer obligations and penalties, the WTPA requires that employers provide to all their employees written notice of their pay rate and pay dates, at the time of hire, on or before February 1 of each year, as well as every time there is a change in the employee’s pay. Employers must obtain signed acknowledgement of receipt of this notice from each employee.

To assist New York employers with compliance, the NY Department of Labor has issued form notice templates that employers may use to satisfy the WTPA notice and acknowledgement requirements. For your convenience, we have posted web links for the template notices, broken down by several employee categories.

The disclosures must be provided in English and in the primary language identified by the employee, so long as the New York Department of Labor has provided a notice template in that language. Currently templates in Spanish, Chinese, and Korean are available on the NYDOL website, with plans to add Creole, Polish, and Russian versions soon.

We’d like to note a few more provisions of the act that all employers should be aware of.

• The WTPA applies to all private sector employers.
• If you have employees who work outside of New York State, they are not covered.
• The Act requires employers to notify employees in writing of any change to the information in any notice at least seven days prior to the change.
• The pay notice can be distributed electronically, but there must be a system in place where the employee can acknowledge the receipt of the notice as well as print out additional copies.
• New-hire notices must be provided to employees hired on or after April 9, 2011 before they perform any work.
• Annual notices must be provided to all employees between January 1 and February 1, beginning in 2012.
• Employers are required to keep copies of the notices and acknowledgments for six years and must be able to provide them upon request.
• If an employee refuses to acknowledge the notice, the NYDOL has instructed employers to still provide the notice and to note the employee’s refusal to sign.

New York employers should review the below template notices and arrange to implement wage notices that are compliant with the WTPA. Employers who create their own wage notice forms, rather than use the standard DOL templates, may want to consult with counsel to ensure that their forms are compliant.

• Pay Notice for Hourly Rate Employees
• Pay Notice for Multiple Hourly Rates
• Pay Notice for Employee Paid a Weekly Rate or Salary for a Fixed Number of Hours (40 or fewer in a week)
• Pay Notice for Employees Paid a Salary for Varying Hours, Day Rate, Piece Rate, Flat Rate or Other Non-Hourly Pay
• Pay Notice for Prevailing Rate and Other Jobs Pay Notice for Exempt Employees
• Pay Notice for Exempt Employees

By Patrick McCormick

In its recent decision in Islands Heritage Realty Corp. v. Joseph, LT-002642-10, NYLJ 1202492662252, at *1 (Dist., NA, Decided April 28, 2011), Judge Scott Fairgrieve, in deciding a motion brought on by order to show cause to vacate a judgment of possession and warrant of eviction, determined that a month-to-month tenancy had been created by the parties’ conduct after they executed a settlement stipulation, even though the tenant agreed to vacate the demised premises no later than September 30, 2010.

Shortly before the day tenant agreed to vacate, Landlord’s agent signed an agreement dated September 9, 2010 that provided:

This 9 September 2010
Balance due to Pierre Borga [petitioner’s agent] for Court stipulation account $1500.00
expiring 9/30/2010.
New agreement if possible will be:
Starting October 1st 2010
2,300.00 Oct. 1st to Oct. 30, 2010
2,300.00 Security Deposit
$4,600
Peirre C. Borga

Respondent/Tenant submitted proof of payment under the “agreement” by two receipts — the first for $1,500.00 dated November 5, 2010 “toward the monthly amount due of $2,300.00 for the period of October 1, 2010 to October 31, 2010″ and the second dated December 20, 2010 for $800.00 “reducing the balance due to zero for the period of October 1, 2010 to October 31, 2010.”

Respondent argued the agreement and payments created a month-to-month tenancy requiring that the judgment and warrant be vacated. Petitioner argued that the agreement did not create a month-to-month tenancy and even if such a tenancy was intended, Respondent failed to fulfill the terms of the new agreement because the $2,300.00 security deposit was not paid and no other monthly payments were made.

The Court rejected Petitioner’s arguments and found that a month-to-month tenancy was created “by Petitioner accepting rent for October of 2010 in the sum of $2,300.00.”

The Court, in holding that “Petitioner may commence a new summary proceeding,” cautioned that “A landlord cannot maintain a nonpayment proceeding against a month-to-month tenant for rent which accrues after the lease expires and after the month-to-month tenant stops paying rent. The landlord’s sole remedy is to bring a holdover proceeding for the fair and reasonable value of past and present occupancy.”

Landlords are thus cautioned that acceptance of payment after a proceeding is settled (even if a written agreement in which a tenant agrees to vacate the demised premises is executed) will likely result in the creation of a month-to-month tenancy, the termination of which will require the commencement of a new holdover proceeding after the requisite notice is served.

Attorneys Fees Awarded Even Though Not Specifically Authorized by Sublease

In Access.1 Communications Corp. v. Shelowtz, 107939/2010, NYLJ 1202491389246 at *1 (Sup., NY, Decided April 11, 2011) the Court discussed numerous issues in an action by a sublandlord against a subtenant (a law firm) to recover rent accruing under the parties’ sublease after subtenant vacated the premises. While several issues worthy of discussion here were addressed, the award of legal fees to the sublandlord stands out.

The main Lease which, pursuant to the sublease, was controlling provided:

Tenant [subtenant] shall pay to Landlord {sublandlord] an amount equal
to the costs that Landlord [sublandlord] incurs in instituting or prosecuting
any legal proceeding against Tenant [subtenant].

While acknowledging the general rule that “attorney’s fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rules,” the Court was persuaded that the clause in question permitted such recovery.

The Court held that while the lease “does not specify ‘legal fees,’ ‘attorney’s fees’ or ‘counsel’s fees,’ the only interpretation that would meet the intent of the parties is that the costs incurred by [sublandlord] in instituting or prosecuting a legal proceeding have to necessarily include reasonable attorney’s fees, because Access.1, which is an incorporated entity, may not commence and conduct legal proceeding (sic) and is required to appear by attorney under CPLR 321(a).” In determining the parties’ intent, the Court referenced a prior settlement stipulation entered into by the parties to settle a prior summary proceeding in which sublandlord reserved its right “to seek attorney’s fees against [subtenant] for its commencement and prosecuting of [the Civil Court] action.”

While the prior settlement stipulation might demonstrate an intent that subtenant be liable for sublandlord’s legal fees incurred in the prior summary proceeding, it is not clear how the Court concluded that the parties also intended that subtenant be liable for sublandlord’s legal fees in the subsequent action.

Landlords and tenants are both cautioned to take care in drafting settlement agreements (and leases) and in particular any clause that relates to liability for legal fees. Both the lease and settlement clauses at issue were sufficiently vague to result in motion practice over their meaning and intent and it is not at all certain how an appellate court will resolve the issues should an appeal be taken.

The Equal Employment Opportunity Commission “EEOC” issued its final revised Americans with Disabilities Act “ADA” regulations and accompanying interpretive guidance, the ADA Amendments Act “ADAAA”, which will become effective on May 24, 2011. The expanded regulations were designed to simplify the determination as to when employees qualify as disabled.

The Amendments Act retains the ADA’s basic definition of “disability” as an impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment. However, it changes the way that these statutory terms should be interpreted in several ways, therefore necessitating revision of the prior regulations and interpretive guidance.

Based on the statutory requirements, the regulations set forth a list of principles to guide the determination of whether a person has a disability. For example, the principles provide that an impairment need not prevent or severely or significantly restrict performance of a major life activity to be considered a disability. Additionally, some short-term impairments may qualify as a disability if they substantially limit major life activities.

“Major life activity” is now defined under the rules to encompass not only those activities formerly included (caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, interacting with others, and working), but several more such as “interacting with others.” Inclusion of the activity of “interacting with others” will pose a continuing challenge for employers confronted with claims that problematic employee conduct caused by mental disabilities is protected.

The ADAAA also added the operation of a major bodily function as a major life activity, and the EEOC added to the statutory definitions to include virtually every physiological function. Thus, major life activities now include the functioning of the immune, musculoskeletal, neurological, brain, genitourinary, circulatory, and reproductive systems, and all major organs.

Whether an impairment is a disability should be construed broadly, to the maximum extent allowable under the law. The principles also provide that, with one exception (ordinary eyeglasses or contact lenses), “mitigating measures,” such as medication and assisting devices like hearing aids, must not be considered when determining whether someone has a disability. Furthermore, impairments that are episodic (such as epilepsy) or in remission (such as cancer) are disabilities if they would be substantially limiting when active.

The regulations also make clear that, as under the old ADA, not every impairment will constitute a disability. The regulations include a list of various conditions that “in virtually all cases” meet the definition of disability based on certain characteristics associated with these impairments. The list includes autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia. This includes workers who previously had the conditions and don’t show evidence now.

Businesses with 15 or more employees have to comply and must make reasonable accommodations for disabled employees unless such steps would pose an undue hardship. Accommodations can include restructuring a job, part-time schedules or granting leaves of absence, and making work areas more accessible. Although these regulations do not apply to the employment practices of businesses with fewer than 15 employees, such businesses, if they are considered places of public accommodation, are required to comply with the ADAAA’s changes to the definition of disability with respect to the goods and services they provide to the public.