On July 10, Ed LoBello authored the Local Bankruptcy Rules Toolkit (Eastern District of New York) published by Thomson Reuters’ Practical Law. The online publication compiles key resources for attorneys in the practice of bankruptcy law in the Eastern District of New York, including applicable statutes, rules, court procedures, and practice notes.
The Appellate Division of the Supreme Court of the State of New York came into being in 1894 during the presidency of Grover Cleveland and preceded by four years, the consolidation of the City of New York into its present five borough/county configuration.
From that time to the present day, each of the four departments of the Appellate Division has maintained its own practice rules that govern the administration of those intermediate appellate courts which cover the 62 counties that comprise New York State.
All of that is soon to change, for effective Sept. 17, 2018, the Appellate Division will have Statewide Practice Rules that will have applicability throughout the four judicial Departments.
Those practitioners familiar with the current rules of the Second Department will find many similarities and will find as well, codification of certain practices in that court that were observed, but not formally enacted in its rules.
On Sept. 17, the Statewide Rules of Practice will be applicable to all matters commenced in the Appellate Division throughout the state, including those in which a notice of appeal has been filed. The rules will be applicable to all matters pending in the court unless a showing can be made to the court that a party would be substantially prejudiced or that it would be manifestly unjust or impracticable to apply the new rules.
The new Statewide Rules offer clarity in several practice areas and some of the highlights are as follows:
|Rule 1250.1(e)||Identifies materials which are deemed confidential by law and not available for viewing by the public and requires that applications for sealing and unsealing be made by motion upon good cause shown.|
|Rule 1250.4||Outlines in detail what is required to obtain (d) poor person relief, (e) pro hoc vice admission, and (f) leave to file an amicus brief.|
|Rule 1250.10(c)||Addresses the process by which a matter is dismissed, and the procedure for vacating the dismissal of an appeal or proceeding on motion.|
|Rule 1250.15(b) and 1250.16 (a)||Requires the publication of the court’s calendars and decisions on its website.|
|Rule 1250.1(c)(4)||Permits service by electronic mail upon consent of the parties.|
|Rule 1250.7(e)||Permits Minuscript in a record or appendix if it was submitted to the court from which the appeal is being taken in that manner.|
|Rule 1250.7(c)||Allows greater flexibility to the parties regarding the reproduction of exhibits in the full reproduced record.|
|Rule 1250.8||Prescribes the form and content of briefs and contains specific requirements which have been commonly followed in practice but are now required. The email address of the attorney filing a brief must now be included and computer-generated briefs are subject to certain requirements.|
|Rule 1250.9(a)||This rule has relaxed the filing requirement of records, briefs and appendices from an original plus eight to an original plus five. Only one copy of a brief need be served, rather than two. In addition, one digital must now be filed.|
|Rule 1250.9||Although some appeals may be actively managed through the issuance of a scheduling order pursuant to Rule 1250.3(b), extensions of time in which to perfect an appeal or to serve and file a brief may be accomplished by stipulation, application or motion depending upon the number of requests.|
The new statewide rules provide definitions that have applicability throughout New York State that include “electronic,” “electronic mean,” and makes reference to “NYSCEF,” which is the New York State Courts Electronic Filing System. These terms are integrated into those parts of the rules that deal with filing and service, and are intended to expedite the flow of business through the court.
Practitioners are advised that searching for what has changed in the adoption of the statewide rules requires knowledge of the former written rules of the individual departments as well as possible unwritten rules that have been observed.
An illustration of the above may be found in the new Rule 1250.15(c)(5) which concerns requests for rebuttal in oral argument:
Prior to beginning argument, the appellant may orally request permission to reserve a specific number of minutes for rebuttal in the First and Third Judicial departments. The time reserved shall be subtracted from the total time assigned to the appellant . . . .
The current local rules of the four departments provide as follows:
|First Department||Rule 600.11(f) Time Permitted for ArgumentSilent as to rebuttal but permitted in practice.|
|Second Department||Rule 670.20 Oral ArgumentSilent as to rebuttal but NOT permitted in practice.|
|Third Department||Rule 800.10 Oral ArgumentSilent as to rebuttal but permitted in practice.|
|Fourth Department||Rule 1000.11(f) Oral ArgumentNo rebuttal argument is permitted.|
As can be seen, by the above, discovering what has changed as to the rules governing any area of appellate practice requires comparison of the old written rules, the old unwritten practices of the individual departments and the new statewide rules.
The statewide rules will also be supplemented by local rules of practice that will be implemented by each of the judicial departments. Practitioners should become familiar with the local rules, and may be alerted to their applicability in a matter by language in the statewide rules such as “…unless the court shall direct otherwise…” or “…the court may require …”
Illustrations of the application of local rules may be seen in Part 670 of the rules of the courts, which pertain to the Second Department. The latest version of those rules are now organized in the same manner as the statewide rules for ease in cross-referencing. The intake form (formerly the Request for Appellate Division Intervention or “RADI”) form has been replaced by initial information statements under local rule 670.3(a). Some further notable changes to the local rules are as follows:
|Rule 670.2(a)||Describes the procedure by which an appeal that is pending on the court’s calendar may be withdrawn.|
|Rule 670.4||Covers motion practice including orders to show cause, leave to file an amicus brief, and leave to appeal to the Appellate Division.|
|Rule 670.11||Refers to criminal appeals and, among other things, provides that in an appeal in which only the legality, excessiveness or propriety of a sentence is raised, may be brought on by motion, denominated as an excessive sentence motion.|
|Rule 670.15||Pertains to the conduct of oral argument in the Second Department and provides for, among other things, a maximum of 15 minutes for each side, the procedure for requesting an adjournment of oral argument, and the matters in which oral argument is not permitted.|
Randall Eng is of counsel to Meyer, Suozzi, English & Klein. He is the former presiding justice of the Second Department.
In the midst of widespread allegations of sexual harassment and growing impetus from the #MeToo movement, New York State and New York City legislators have passed new anti-sexual harassment laws — including a requirement that all New York employers provide annual anti-sexual harassment training to their employees.
NEW YORK STATE LEGISLATION
Effective October 9, 2018: Mandatory Employee Training
Characterizing its action as “necessary to combat sexual harassment in the workplace”, the New York State Legislature passed sweeping new sexual harassment laws on April 12, 2018. Effective October 9, 2018, all employers in New York State, private and public, must provide annual anti-harassment training to all employees. The training must be interactive and include specific topics identified in the new legislation, including an explanation of sexual harassment and information concerning federal, state and local statutory provisions. Further guidance from the New York State Department of Labor and the New York State Division of Human Rights with regard to these and other training requirements will be published in the coming weeks.
Effective October 9, 2018: Mandatory Sexual Harassment Policy
Effective October 9, 2018, all employers in New York State must adopt a written sexual harassment prevention policy which, among other minimum requirements, includes a complaint form, informs employees of their rights of redress and states that retaliation is unlawful. A minimum-standards policy is to be published by state agencies for the guidance of employers.
Effective Immediately: Non-Employees Protected
The legal protections from sexual harassment previously accorded to employees (and the related responsibilities and liabilities of employers) are extended so as to protect non-employees, including contractors, vendors, consultants and others providing services in New York workplaces.
Effective July 11, 2018: Prohibition of Confidential Settlements
Settlement agreements involving sexual harassment claims may not include non-disclosure provisions unless it is the complainant’s preference to include such a provision.
Effective July 11, 2018: Prohibition of Mandatory Arbitration Agreements
Employers are prohibited from requiring employees to sign agreements requiring mandatory binding arbitration of sexual harassment claims.
NEW YORK CITY LEGISLATION
Also in April of 2018, the New York City Council passed the “Stop Sexual Harassment in New York City Act”. The Act imposes new obligations on New York City employers and amends the New York City Human Rights Law so as to permit claims of sexual harassment by all employees, regardless of the size of their employer.
Effective September 6, 2018: Mandatory Dissemination of Information
All employers in NYC must display an anti-sexual harassment poster to be published by the New York City Commission on Human Rights (NYCCHR) and must provide an information sheet on sexual harassment to all new employees, which information sheet also will be published by the NYCCHR.
Effective April 1, 2019: Mandatory Employee Training
Employers with 15 or more employees are required to conduct annual anti-sexual harassment training for all employees, including supervisors and managerial employees. Covered employees are those who work more than 80 hours in a calendar year and work on either a full time or part time basis within NYC. The NYCCHR will create a model training program. Employers must maintain records of all trainings including signed employee acknowledgements.
Effective Immediately: Expanded Coverage of Several Harassment Claims
The New York City Human Right Law will apply to all employers (previously it applied only to employers with four or more employees), and the statute of limitations for asserting a sexual harassment claim is extended from one year to three years.
ENSURING COMPLIANCE WITH THE NEW ANTI-SEXUAL HARASSMENT LAWS
In anticipation of the implementation of these new laws, employers should review the newly-imposed requirements with employment counsel and amend their policies and training programs as necessary to ensure compliance. Employers who do not currently have policies and training procedures in place will need to develop and implement them in short order. While the model policy and training programs to be issued by City and State agencies will provide guidance as to minimum standards, anti-harassment measures should be tailored to meet specific workplace needs and environments.
For more information on Meyer Suozzi’s Employment Law practice, click here.
“The Times They Are a-Changin’,” Bob Dylan ©1963, 1964
As of January 1, 2018, Commercial Division Rule 10 was amended. The rule, innocuous on its face, specifies what information an attorney must supply at a preliminary conference. The amendment is entitled “Certification Relating to Alternative Dispute Resolution.” It states:
“Counsel for each party shall also submit to the court at the preliminary conference and each subsequent compliance or status conference, and separately serve and file, a statement, in a form prescribed by the Office of Court Administration, certifying that counsel has discussed with the party the availability of alternative dispute resolution mechanisms provided by the Commercial Division and/or private ADR providers, and stating whether the party is presently willing to pursue mediation at some point during the litigation.”
Thus, from the first time your case enters the judicial system, you will be required to make the above disclosure. In addition, based upon the above language, you are “certifying” that you have done as requested by the Commercial Division Rules.
This does become a bit more complex because Rule 11 was also modified. Rule 11 Discovery, is a multipart rule to begin with, and now will contain new areas that will interact with the Commercial Division’s Advisory Council’s desire to motivate parties toward Alternative Dispute Resolution, and most specifically to mediation. Rule 11 (a), set forth below, contains what might be called the enforcement elements of Rule 10.
Rule 11. Discovery
(a) The preliminary conference will result in the issuance by the court of a preliminary conference order. Where appropriate, the order will contain specific provisions for means of early disposition of the case, such as (i) directions for submission to the alternative dispute resolution program, including, in all cases in which the parties certify their willingness to pursue mediation pursuant to Rule 10, provision of a specific date by which a mediator shall be identified by the parties for assistance with resolution of the action; (ii) a schedule of limited-issue discovery in aid of early dispositive motions or settlement; and/or (iii) a schedule for dispositive motions before disclosure or after limited-issue disclosure. [Underlined portion is new]
While serving on the bench, I recognized the difficulty that some lawyers might have suggesting mediation to their clients or to their adversary (a sign of weakness?). Thus, I always informed them that they could tell their clients the judge recommended mediation. If necessary, I would meet with the parties and their lawyers at the same time and explain that it was the Judge’s decision to move forward with mediation to save them time and money. My philosophy was echoed by comments from Marc Zauderer, a member of the Advisory Council, in an article published in the New York Law Journal (New Commercial Division Rule Amendments Emphasize Use of ADR, October 17, 2017). The rule takes the onus of suggesting mediation off the backs of the attorneys and places it squarely on the rules.
It is clear that the goal of the Advisory Council is to make the Commercial Division of New York State the location for domestic and international corporations to resolve disputes. Changes such as the ones we’ve seen in the area of ADR within the Commercial Division, if followed affirmatively and with transparency, will tend to speed the disposition of cases.
If you’ve read this article and don’t usually have cases in the Commercial Division, you may find Rule 10 meaningless to your practice, but be aware that rules that start in such divisions of the Supreme Court as the matrimonial area or in this case the Commercial Division, frequently have a habit of working their way into general Supreme Court practice via the Rules of the Chief Judge.
I would urge commercial litigators to give heed to this new rule and make ADR a part of your attorney-client discussion on a regular basis.
Over a dozen years ago, I attended a meeting at a local Bar Association for its commercial litigation committee. The room was packed with perhaps 80 people in attendance representing small, as well as medium and large law firms. The topic was the future of ADR in commercial litigation. The Administrative Judge inquired of the attendees how many of them would consider reaching out to a mediator to assist in one of their matters, and only one person raised their hand. An active discussion ensued, covering reasons that militate against mediation such as, showing weakness to your adversary, showing weakness to your client, and indicating to the judge before whom the case was pending that you had no confidence in your own case.
Today I know (or hope) the vote would be dramatically different.
“For the times they are a-changin’”
Transitioning from Presiding Justice of the Appellate Division, Second Department to the private practice of law has given me the opportunity to reflect upon my service in the New York state courts for over three decades. It was a long journey which ranged from assignment to the Summons Part of Manhattan Criminal Court to designation as an Associate Judge of the Court of Appeals for one matter. I think fondly of the many dedicated jurists that I was privileged to work with along the way, and the deep appreciation that I will always have for their respect for the rule of law.
My judicial career began in the Criminal Court of the City of New York in 1983. At that time, the transit fare was $.75, and the national average price of a gallon of gas was $1.24. I was 35 years old when appointed to the Court by Mayor Edward I. Koch, who had a decided preference for younger candidates in his judicial appointments. Indeed, in the year that I was chosen, more than half of his appointees were under the age of 40. From that beginning, I was able to enjoy a judicial tenure that exceeded 34 years, most of which was spent on the criminal side during the raging crack epidemic and the accompanying steep homicide rates.
The highlight, of course, of my time on the bench was my service on the Appellate Division, Second Department. It is difficult to appreciate the enormity of the workload of the Court without having been a part of it. This, I believe, is an appropriate opportunity to share some of my thoughts on the subject.
When I arrived at the Appellate Division, Second Department in January 2008 after more than 20 years of service on the trial bench, I stepped into the rarefied atmosphere of an extraordinary court populated by judicial and non-judicial personnel of the highest caliber, many of whom had lengthy years of experience. The court was then comprised of 18 men and four women, including Presiding Justice A. Gail Prudenti, who had the reputation of being an exceptional administrator. At that time there were two justices of Latino heritage, one African-American, and one Asian-American, myself. By the time I retired as presiding justice in December 2017, the composition of the court had undergone a remarkable transformation as witnessed by the fact that there were now 12 women jurists on the court and ten men. Among these judges were three Latinos, four African-Americans, and one Asian-American, again, myself.
Much had changed over 10 ten years at the Court, five as an associate and five as presiding justice, while much had remained the same. We continued to be the busiest appellate court in the country, faced with enormous caseloads coupled with budget reductions and hiring freezes brought on by the Great Recession which began in earnest in 2009.
The average number of cases decided by the Court were 4,000 per year, the number of new attorneys admitted by the Court was 2,619 per year, and the average number of attorneys who were disciplined per year was 231. Added to those figures were a varying number of suspended and disbarred attorneys who were seeking reinstatement to the Bar.
Criminal appeals had long accounted for a significant percentage of the Court’s docket and it was common to have five or more criminal cases appearing on every Day Calendar. As crime statistics began to decline over the past 10 years, the number of criminal cases in the inventory were reduced accordingly. However, there appeared to be a concomitant increase in the number of Family Court cases, driven in all likelihood by rising populations in many of the counties comprising the Second Department as well as by stress brought on by a declining economy.
Criminal and Family Court appeals were given priority in the processing of cases because of the liberty interests involved and by the need to deal with issues of custody, visitation, and support which have a heavy impact upon vulnerable populations.
We have all come to know the Appellate Division, Second Department for its prodigious output of decisions reflecting 80 cases per week on its Day Calendars, supplemented by submission calendars which decide cases in which oral argument is not permitted under the rules of the Court.
Added to the workload of the Second Department are decisions flowing from motions made to the Court seeking various forms of relief including requests for extension of time to perfect an appeal and extensions of time to answer or reply. Motions seeking re-argument, stays of trial pending appeals, leave to appeal to the Court of Appeals, and orders to show cause come before the Court on an ongoing basis. The total number of motions heard and decided annually by either a single judge or a four judge bench came to approximately 11,000 during my time in the Court.
Functioning outside of the historic and beautiful courthouse of the Second Department at 45 Monroe Place in Brooklyn Heights are the ancillary agencies of the Court that have a myriad of responsibilities under the supervision of the Appellate Division.
Among the larger agencies is the Mental Hygiene Legal Service (MHLS) which is a dedicated legal advocacy program providing a broad range of protective legal services and assistance to mentally-disabled persons under the care or jurisdiction of State-operated or licensed facilities. In 2007, just before my designation to the Court, MHLS was tasked with the responsibility of providing representation to sex offenders alleged to have mental abnormalities making them likely to re-offend and, therefore, in need of confinement or intensive supervision. There are now approximately 85 attorneys providing these services in both institutional and community settings throughout the five judicial districts which comprise the Second Department.
If one adds to the list of agencies the Appellate Term, two Committees on Character and Fitness, three Grievance Committees and the Attorneys for the Children Program, it becomes abundantly clear that the responsibilities of the Second Department are substantial and far-reaching.
I look forward to the new challenges of private practice and am very grateful for having had the good fortune of serving with the extraordinary judges of the Appellate Division, Second Department.
Hon. Randall T. Eng served as a New York Supreme Court Justice for over 30 years, most recently as Presiding Justice of the Appellate Division, Second Department, before joining Meyer, Suozzi, English & Klein, P.C. as a member of the firm’s litigation and dispute resolution department, including the appellate and criminal defense practices. He can be reached at firstname.lastname@example.org.
There was a time when everyone knew the difference between an employee and an independent contractor. An employee went to the office or factory, worked his eight hours for an employer (and only one employer), had his taxes deducted from his paycheck, and was paid two weeks’ vacation. The classic independent contractor was the plumber who came to the customer’s home (or business) in his own truck. The plumber told you when he chose to come, arrived when it was convenient for him, wholly dictated the price, used his own tools and waited to be paid on the spot. He then left, never to be seen again until the next leaky pipe.
The Rise of the Alternative Worker
The determination as to who is an employee and who is an independent contractor has become less clear over the years, mainly due to the expansion of the “alternative workforce” versus the employee workforce. This expansion was partly caused by the way businesses ran their operations to stay competitive in the global marketplace. In the 1970’s and 1980’s, recessions led to the downsizing of employee-rich bureaucracies leading companies to rethink their business models to include temporary workers, who may have been employed by someone, but were not employees in the place where they worked – they were part of an independent contractor force.
The next shoe to drop was globalization. The rise of technology and less costly transportation methods led to offshore production. Businesses simply could not afford a large employee workforce, and hiring workers on an ad hoc basis lowered their bottom lines and increased their profitability.[i] As of 2010, more than 10,000,000 workers, comprising 7.4 percent of the U.S. workforce, were classified by the Bureau of Labor Statistics as independent contractors, and another 4,000,000 worked in alternative work arrangements in which they were legally classified as independent contractors for one or more purposes. In that year, “alternative” workers, as they were called, accounted for approximately $626 billion in personal income, or about one in every eight dollars earned in the U.S.[ii]
The Common Law Tests
So, what is the law as it pertains to the employee versus the independent contractor conundrum? In 1926, the U.S. Supreme Court opined regarding who could be identified as an independent contractor in Metcalf & Eddie vs. Mitchell. In that case, the Court used well-established common law as its guide. In examining the performance of the contract at issue, the Court looked to whether (i) the performance of the contract involved the use of judgment and discretion on the part of the worker; and (ii) the worker was required to use his best professional skill to bring about the desired result. Thus, the Court concluded, if the worker enjoyed “liberty of action,” it “excludes the idea that control or right of control by the employer which characterizes the relation of employer and employee and differentiates the employee or servant from the independent contractor.” [iii] The key factor in these cases was level of control exerted by the putative employer.
New York courts apply the same common-law right-to-control test to determine whether a worker is an employee in several contexts.[iv] In Bynog v. Cipriani Group, Inc., the New York Court of Appeals identified five factors “relevant to assessing control, includ[ing] whether the worker (1) worked at his own convenience; (2) was free to engage in other employment; (3) received fringe benefits; (4) was on the employer’s payroll; and (5) was on a fixed schedule.”[v]
Then, there is the “economic reality test,” which is applied in connection with Fair Labor Standard Act (“FLSA”) cases, which focuses on “the totality of the circumstances.” In those cases, the “ultimate concern …[is] whether, as a matter of economic reality, the workers depend upon someone else’s business for the opportunity to render service or are in business for themselves.”[vi] The courts rely on several factors that are relevant in determining whether individuals are employees or independent contractors. These factors are derived from the Supreme Court’s decision in United States v. Silk and include (1) the degree of control exercised by the employer over the workers; (2) the workers’ opportunity for profit or loss and their investment in the business; (3) the degree of skill and independent initiative required to perform the work; (4) the permanence or duration of the working relationship; and (5) the extent to which the work is an integral part of the employer’s business.[vii]
Uber Drivers: Misclassified Employees?
In this complex world, it is impossible to make a snap determination as to who is an independent contractor and who is an employee. Thus, misclassification lawsuits have grown at a record pace. As of 2015, the number of wage and hour cases filed in federal court rose to 8,871, up from 1,935 in 2000, most pertaining to misclassification, including misclassifying workers as independent contractors when they are later found to be employees.[viii] That correlates to an increase of 358 percent, compared to the federal judiciary’s overall intake volume, which rose only a total of about seven percent over the same period.
Nowhere is the trend toward expanding misclassification litigation more apparent than when it comes to a company such as Uber. At first blush, Uber would seem to have a classic independent contractor relationship with its drivers. Let’s look at the basic facts: An Uber driver drives his/her own vehicle, obtains his/her own insurance, maintains that vehicle, drives when and where and for how long he/she desires. The driver is not issued any equipment by Uber and uses his/her own cell phone to access customers. Moreover, an Uber driver can drive for its competitor, Lyft, at any moment the driver wishes. It would seem the Uber driver has “liberty of action,” noted by the Court in Metcalf, and, thus, would not be considered an employee.
However, some courts and administrative agencies have ruled otherwise. In Berwick v. Uber Technologies, Inc., the first California decision to hold that Uber misclassified drivers as independent contractors, the California Labor Commissioner ruled that the Uber drivers bringing a class action were employees and not independent contractors.[ix] The Commissioner’s focus was on control.
Contrasting the factors listed above that would seem to contradict such control, the Commissioner found that Uber was involved in virtually every aspect of the operation. First, drivers can only avail themselves of Uber’s customers by utilizing Uber’s app. Next, Uber conducts driver background checks, sets the drivers’ compensation, and monitors drivers’ performance through customer reviews. Finally, Berwick held the work performed by the drivers was “integral” to the regular business of Uber – which is axiomatic.
Likewise, in June 2017, the New York State Unemployment Insurance Appeal Board held that three complainants were employees, stating, “Uber exercised sufficient supervision and control over substantial aspects of their work as Drivers,” similar to the analysis and holding in Berwick.[x] One of the factors considered by the Commissioner was that “Uber did not employ an arms’ length approach to the claimants” that the Commissioner believed would be present in a typical independent contractor relationship.
This raises interesting questions. Yes, Uber set the rates that could be charged and set certain conditions for drivers to follow, but one must assume some rules are necessary to establish consistency of the business model to attract and maintain customers for Uber and the drivers. Uber could not exist if it simply provided a means for drivers to pick up a passengers and left it to them to figure out the price of the service. However, what is an element of control, and sometimes what constitutes “control,” can be in the eye of the beholder.
Other Courts: Drivers Are Not Employees
There have been decisions to the contrary. In McGillis v. Department of Economic Opportunity, the Third District Court of Appeal of Florida upheld an administrative decision finding drivers were not employees.[xi] On the issue of “control” the court acknowledged that “both employees and independent contractors ‘are subject to some control by the person or entity hiring them. The extent of control exercised over the details of the work turns on whether the control is focused on simply the result to be obtained or extends to the means to be employed.’” Citing authorities, the court reasoned that if control is confined to results only, there is generally an independent contractor relationship, and if control is extended to the means used to achieve the results, there is generally an employer-employee relationship.
In Saleem v. Corporate Transportation Group, the Second Circuit addressed black car drivers in New York who were asserting claims against owners of black car “base licenses” and affiliated entities, pursuant to the FLSA. Like Uber, the black car drivers “possessed considerable autonomy in their day-to-day affairs.”[xii] They could determine when and how often to drive, without providing any notice to the Defendants, and they were at liberty to—and did—accept or decline jobs that were offered. In the end, the court found that the drivers were independent contractors, noting “[w]hile Defendants did exercise direct control over certain aspects of the CTG enterprise, they wielded virtually no influence over other essential components of the business, including when, where, in what capacity, and with what frequency Plaintiffs would drive.”[xiii]
What is the difference between the black car drivers in Saleem and the cases where Uber has been found to be an employer? The answer is very little. However, the law, like life, is nuanced. If the question is what constitutes control for purposes of making such a determination, one small factor could turn the tide either way. The real question is: has the economy and technology so changed that the normal paradigms we all think we understood regarding the nature of work and what it means to be “employed” mandate that a new way of looking at such concepts is in order-one way or the other?
[i] The Rise of the Supertemp, Jody Greenstone Miller and Matt Miller Harvard Business Review, May 2012.
[ii] The Role of Independent Contractors in the U.S. Economy, Jeffrey A. Eisenach, American Enterprise Institute; NERA Economic Consulting: December 1, 2010.
[iii] Metcalf & Eddie vs. Mitchell, 269 U.S. 514, 522 (1926).
[iv] Smith v. CPC Int’l, Inc., 104 F.Supp.2d 272, 275 (S.D.N.Y.2000) (“[T]he common law test of agency discussed in Darden is the same test applied by New York courts in addressing a variety of employer-employee relationships.”).
[v] Bynog v. Cipriani Group, Inc., 1 N.Y.3d 193, 198 (2003).
[vi] Brock v. Superior Care, 840 F.2d 1054, 1059 (2d Cir. 1988); see also Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33 (1961) (“‘[E]conomic reality’ rather than ‘technical concepts’ is to be the test of employment.” (quoting United States v. Silk, 331 U.S. 704, 713 (1947)).
[vii] United States v. Silk, 331 U.S. 704 (1947).
[viii] Why Wage and Hour Litigation is Skyrocketing, Washington Post, November 25, 2015.
[ix] Berwick v. Uber Technologies, no. 11-46739 EK, 2015 WL 4153765 (Cal. Dept. Lab. June 3, 2015).
[x] In the Matter of AK, JH and JS v. Uber, ALJ case No. 016-23858, New York State Unemployment Insurance Appeal Board (June 9, 2017).
[xi] McGillis v. Department of Economic Opportunity, 210 So.3d 220 (FDCA 3d Dist. 2017).
[xii] Saleem v. Corporate Transportation Group, Ltd., 854 F.3d 131 (2d Cir. 2017).
On December 20, 2017, Congress passed the Tax Cuts and Jobs Act1, which was signed into law by the President on December 22, 2017. While the new law maintains the overall framework of the existing federal estate, gift and generation-skipping transfer (GST) tax laws, it puts in place important temporary taxpayer friendly changes.
Building on the major modifications enacted under the Taxpayer Relief Act of 2012, the new Act effects further dramatic reductions in federal transfer tax burdens. Effective January 1, 2018, the law provides for the following:
- Increased Exemptions. The estate, gift and GST exemptions have been doubled from $5 million to $10 million per person, as indexed for inflation occurring after 2011. Accordingly, the inflation adjusted exemption, which would have been $5.6 million in 2018, is expected to jump to $11.2 million per person as of January 1, 2018.
- Sunset. The new law includes a “sunset” provision, pursuant to which the increased exemptions expire at the end of 2025, returning to the $5 million level, indexed for inflation. The law also directs that regulations be prescribed to avoid a “clawback” if gifts exceed the exemption threshold when death occurs after the sunset of the exemptions.
- Inflation Adjustment. The inflation adjustment index has been changed. Prior law based the computation on the Consumer Price Index for all Urban Consumers (“CPI-U”). Under the new law, the adjustment will be based on Chained CPI-U (“C-CPI-U”), which generally produces a slower growing CPI calculation than the CPI-U calculation.
Planning Considerations Under the Tax Cuts and Jobs Act
- Dramatic Window of Opportunity. No tax legislation is “permanent.” It is important to keep in mind that the new Act was adopted along party lines, and is subject to modification by any future Congress and administration. Moreover, as noted, the increased exemptions are set to be in place for a limited period, expiring on December 31, 2025. Therefore, planning should be implemented while the law permits, and not placed on the back burner.
- Spousal Portability. The spousal portability provisions, initially adopted under the 2010 Tax Relief Act, allow a surviving spouse to make an election to use the deceased spouse’s unused exemption (“DSUE”). Under the new law, at least for the next 8 years, it may therefore be possible for married couples to shelter up to $22.4 million (indexed for inflation) from federal transfer taxes.
- Credit Shelter Planning. Planning with testamentary “credit shelter” or “by-pass” trusts established by the first spouse to die, to reduce the overall estate taxes payable upon the death of the second spouse, has long been a cornerstone of estate planning for married couples. While the new high federal exemption amount of $10 million, indexed for inflation, coupled with the spousal portability provisions, render it possible for married couples to shelter from federal estate tax over $20 million without the necessity of creating trust instruments, credit shelter planning remains an appropriate and important planning tool for numerous reasons. Caution is in order, however, for those married couples with existing Wills containing federal credit shelter formula bequests. Those formulas should be reviewed to confirm that the credit shelter bequest is not overfunded or underfunded due to the exemption amounts, leaving the surviving spouse with too little or too much in assets, and potentially generating an unwanted state estate tax upon the death of the first spouse.
- State Estate Taxes. New York, like several other states, has its own estate tax system. New York incorporates into its law many of the federal estate tax provisions, but New York’s exemption and rates are different from the federal exemptions.
- While New York has repealed its gift tax2, its estate tax exemption (the “NYS Basic Exclusion Amount”) is presently only $5.25 million. Under current law, the NYS Basic Exclusion Amount is scheduled to increase on January 1, 2019 to equal the federal Exemption Amount, as indexed for inflation at that time. However, the provisions of the New York law are written such that the NYS Basic Exclusion Amount in 2019 will not match the new increased federal exemption amount of $10 million, indexed for inflation, but rather will increase only to $5 million, as indexed for inflation occurring after 2011, using CPI-U. Accordingly it is projected that the NYS Basic Exclusion Amount at that time will be approximately $5.8 or $5.9 million. Consequently, for those residing in New York (and other states with a separate and lower estate tax threshold), it may be prudent to limit a credit shelter disposition to the amount that can pass free of state estate tax.
- New York has not adopted spousal “portability” provisions to allow a surviving spouse to use a deceased spouse’s unused gift and estate tax exemption.
- Gifting. Lifetime gifting of assets, whether outright or in trust, can bring substantial transfer tax savings. For those states which, like New York, impose an estate tax but not a gift tax, gifts can result in a substantial reduction in state estate tax liability. Further, the gifting of appreciating assets provides the additional benefit of removing the post-transfer appreciation in the value of the assets from the donor’s estate. Many gifting vehicles, moreover, offer discounting advantages that are absent from or less effective than those associated with testamentary transfers. In assessing the benefits of lifetime gifts, since the recipient of a gift receives the donor’s income tax basis in the gifted assets – as opposed to the recipient of a testamentary transfer receiving an income tax basis as of the date of death – any proposed gift must measure the potential capital gain consequences as against potential gift and estate tax savings.
- Dynasty Trusts. For those taxpayers who have established (or wish to establish) a Dynasty Trust, substantial gifts of $10 million (indexed for inflation), after factoring in any prior taxable gifts, may be made to a Dynasty Trust to which GST exemption may be allocated, exempting the trust assets from further estate, gift and GST taxation for the term of the trust. Creation of the trust in a jurisdiction that has repealed or liberalized its Rule Against Perpetuities can allow the trust assets to provide for future generations without being burdened by further estate, gift or GST taxes. During the lifetime of the creator of the trust, the trust can be structured as a “grantor trust” for income tax purposes, so that the creator is taxable on any income. Such payments serve to reduce further the taxpayer’s gross estate for federal estate tax purposes.
- Spousal Lifetime Access Trusts. The Spousal Lifetime Access Trust (SLAT) can enable married couples who wish to make large lifetime gifts to descendants without a dramatic impact on their current lifestyle. With a SLAT, one spouse makes a gift to an irrevocable trust using the donor-spouse’s gift tax exemption. The non-donor spouse is named as a current beneficiary, which allows the trustee to make distributions of trust funds to the beneficiary-spouse during his or her life.
The Tax Cuts and Jobs Act implements far-reaching changes to the Internal Revenue Code, including the temporary changes to the estate, gift and GST exemptions summarized in this Alert. For a limited time, this law offers a valuable opportunity to transfer significant wealth to younger generations. To assure you have a tax-efficient and updated estate plan that makes timely use of techniques appropriate for each individual’s circumstances, we recommend a review of existing estate plans and related documents.
1Under the reconciliation process in which the bill was finally passed by both houses of Congress, the actual name of the act is “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”
2 New York law provides, however, that gifts made within 3 years of death will be included in the gross estate of a New York resident decedent, if the gift is made between April 1, 2014 and December 31, 2018 and the decedent was a New York resident at the time of the gift.
For more information on Meyer Suozzi’s Wills, Trusts & Estates Law practice, click here.
Our Wills, Trusts & Estates Law practice group includes the following attorneys:
|Nathaniel L. Corwin
|Jayson J.R. Choi
As a former Nassau County Assessor, I have first-hand knowledge regarding the development of fair and equitable assessments for commercial properties. As a former New York State Legislator, I also understand that the Nassau County government requires enough revenue to operate in a professional and effective manner.
That being said, as Judge Anthony Marano astutely pointed out in his ruling on Tuesday and which was highlighted in the Newsday article, “Fines Ruled as ‘Illegal Tax’,” the penalties for not supplying timely information for the Disputed Assessment Fund, initially designed as fines, can be construed as fees used to raise revenue.
Nassau County at this point, must find a more reasonable process to accurately assess class 4 commercial properties while potentially subsidizing the Disputed Assessment Fund.
New York City’s new Predictive Scheduling Law, effective November 26, 2017, imposes significant constraints on retail and fast food employers. The law is complex, and the penalties for non-compliance are severe.
Among other requirements, the new law mandates that covered employers:
- Provide employees with written schedules and post schedules at least 72 hours before the beginning of the scheduled hours of work
- Provide 72 hours’ written notice of schedule changes
- Post and provide employees with notice of changed schedules
The law prohibits:
- Cancelling a regular shift within 72 hours of the start of such shift
- Requiring an employee to work with less than 72 hours’ notice without an employee’s written consent
- Requiring an employee to call in fewer than 72 hours before a shift begins
- Scheduling an employee for an on-call shift
Fast Food Establishment Employers
The law imposes new scheduling requirements on fast food establishments, including the following:
- Provision of written work schedules to employees
- Posting of work schedules
- Provision of schedule changes to employees and reposting of changed schedules within 24 hours of employer’s knowledge of change
- Written consent of employee to work hours not scheduled
- Payment of premiums, ranging from $10 to $75, where an employee’s schedule varies from the original work schedule
Covered employers are subject to (1) compliance investigations by the newly created Labor Standards Division, (2) lawsuits by the New York City Corporation Counsel, and (3) private actions commenced by individuals. The new law authorizes the imposition of penalties for violations of its provisions ranging from $200 to $2,500 per violation depending on the specific provision violated by the employer.
Retail and fast food employers operating in New York City should review their scheduling policies now and develop procedures to ensure compliance with the requirements of the new predictive scheduling law.
For more information on Meyer Suozzi’s Employment Law practice, click here.
“The nation behaves well if it treats its natural resources as assets which it must turn over to the next generation increased, and not impaired, in value.” Theodore Roosevelt.
New York has long treated park property with a special reverence, and any attempt by a local government to use designated park property for any other purpose is fraught with peril. This principle was recently illustrated by the Court of Appeals June 6, 2017 decision in Matter of Avella v. City of New York et al.1 This case involved the re-development of the former Shea Stadium property which, believe it or not, is legally considered parkland, and is subject to the Public Trust Doctrine.
The Public Trust Doctrine
In 2001, the New York Court of Appeals took note that the ancient Public Trust Doctrine remains a vibrant legal principle in New York. The history of this doctrine is examined in Friends of Van Cortlandt Park v. City of New York,2 where the Court reaffirmed that public property which has been designated as parkland is held in public trust, such that the property may not be used for any other purpose without authorization from the New York State Legislature.
Van Cortlandt Park examined precedents from the Court of Appeals, beginning with Williams v. Gallatin,3 in which the Court considered New York City’s proposed ten year lease of a building in Central Park to the Safety Institute of America. The proposed lease provided that the building would be improved by the tenant and used for safety education. At certain specified times, the building would be open to the public. In enjoining the lease, the Court concluded that Central Park is dedicated to public use for park and recreational purposes, for the promotion of public health, safety and welfare, and uses which are inconsistent with park purposes, no matter how worthy, are an impermissible deviation from the authorized purposes.
The Court of Appeals again had occasion to examine this principle in 755 Fifth Ave. v City of New York,4 where the Court allowed a café and restaurant in Central Park. Based on the particular facts of that case, the Court concluded that the proposed restaurant was within the ambit of uses which the Park Commissioner was authorized to introduce to the park, and were consistent with and promoted the recreational use of the park property. However, this decision turned to a large extent on the particular language of the State legislation authorizing use of Central Park, so that it is not necessarily persuasive with respect to similar uses of other park property.
In 1972, the Court again spoke with respect to permissible uses of park and recreation property, and rejected a proposed five year lease of property to permit private operation of a dock and related facilities at Lake George. In Lake George S. B. Co. v. Blasio,5 the Court ruled that this constituted an unlawful diversion of public park property for a private use, which could be accomplished only with the consent of the State Legislature (which, in this case, was lacking).
The Court then had two occasions in 2014 to opine further upon these principles.
In Union Sq. Park Community Coalition v. New York City Dept. of Parks & Recreation,6 the Court permitted a restaurant in Union Square Park pursuant to a license agreement. (Assuming that a lease would be prohibited by court precedents, the City here proposed a revocable license agreement. Claiming that this was a distinction without a difference, the opponents argued that it was tantamount to a lease, and was an unlawful interference with park property). The Court reviewed its previous decision in 755 Fifth Ave.,7 and concluded that each case involving a use of public park property required an examination of several factors, including the conditions upon which the property was dedicated to park use, the terms and conditions for operation of the proposed use, and the degree to which the public would be excluded from use, in order to identify the true nature of the underlying transaction. Concluding that this transaction involved a license, which was authorized by statute, no other legislative approval was required.
However, in Capruso v. Village of Kings Point,8 the Court reached the opposition conclusion with respect to a village’s proposed use of parkland for a public works facility. The Village had in fact been using the park property for non-park purposes for a number of years, but its new effort to construct the public works facility on the property aroused opposition by neighboring owners of private property. The State of New York also joined in the litigation. After resolving several procedural issues, the Nassau County Supreme Court enjoined the proposed use, and the Appellate Division, Second Department affirmed.9 Noting that the status of the property as parkland was undisputed, and concluding that the proposed use was a use of a substantially different scale, the Court of Appeals affirmed.
Matter of Avella
With the foregoing history of the Public Trust Doctrine in mind, Avella brought to the Court of Appeals a mixture of issues predicated upon the established principles of that doctrine and the specific legislation for the re-development of Shea Stadium. It may not be commonly known, but Shea Stadium and its related facilities were located in Flushing Meadow Park, an area clearly subject to the Public Trust Doctrine. In an effort to recover from the losses of the Dodgers and Giants at the end of their respective 1957 seasons, New York City embarked upon a project to lure a new Major League baseball team to New York. To that end, in 1961 the New York State Legislature enacted the required legislation authorizing New York City to construct and finance a municipal baseball stadium within the park. This facility became known as Shea Stadium, and was the home for the New York Mets for nearly 50 years.
In 2008, Shea Stadium was demolished, and replaced with a new stadium, presently known as Citi Field. This demolition and construction was part of an overall plan to re-develop that particular property and other, blighted, property in the area of Queens known as Willets Point, for which the City had issued requests for proposals for area re-development. Queens Development Group, LLC (QDG), a joint venture formed by entities controlled by Sterling Equities Associates (owners of the Mets) and The Related Companies, submitted a proposal for construction of retail space, a hotel, an outdoor space, a public school, and affordable housing in the Willets Point neighborhood, and a large-scale retail complex and movie theater on an area designated “Willets West,” on the Citi Field parking lot where Shea Stadium once stood.
Plaintiffs, including a State Senator, not for profit groups, businesses, taxpayers, and users of Flushing Meadow Park sued to enjoin the proposed development on parkland. The case wound its way to the Court of Appeals, which invoked the Public Trust Doctrine to enjoin the proposed commercial uses of the parkland areas. However, in doing so, the Court was required to review the history of the Public Trust Doctrine, and the particular legislation which had initially authorized Shea Stadium and later authorized redevelopment, and its analysis serves as a teaching moment for municipal attorneys (and attorneys for developers and community groups) in re-emphasizing the rule that park property is held in public trust, inviolate to non-park uses, unless the State Legislature grants a clear authorization for the intrusion of other uses.
In Avella, the City and the developers argued that the 1961 legislation under which Shea Stadium had been constructed in Flushing Meadows Park was broad enough to allow the construction of a shopping mall more than a half-century later. This required the Court of Appeals to review the specific (but not necessarily clear) language of the 1961 State legislation, in order to determine the scope of the granted authority.
The Court cited Van Cortland Park,10 holding that the approval of the Legislature must be “plainly conferred” through “direct and specific approval.” The specific State legislation in 1961, codified in Administrative Code of the City of New York section 18-118, granted the City authority to enter into agreements to use the grounds and buildings “to use, occupy, or carry on activities in, the whole or any apart of a stadium, with appurtenant grounds, parking areas, and other facilities.” After lengthy and detailed discussion and analysis, the Court concluded that this language clearly did not extend to construction of a shopping mall or movie theater, as these were not “appurtenant” to the clearly authorized stadium and parking lot uses. Rather, these were commercial uses, not within the ambit of the permissible park uses, or the stadium and its related uses.
The Court noted that the redevelopment of Willets Point was a laudable goal, but that good intentions were not a sufficient basis upon which to permit parkland to be used for non-park purposes. Arguments as to the merit of the proposed uses, or lack thereof, would have to be addressed to the State Legislature, which has the final authority to determine the uses to which parkland may be put.
Chief Judge DiFiore filed a lengthy dissent, arguing that the Legislature previously had authorized the use of this land for non-park purposes, and that the majority had too strictly read the statutory language. In her view, the statute was broad enough to authorize uses which were for the benefit of the public, and were related to the permitted uses of Citi Field, such that the Public Trust Doctrine did not prevent the proposed uses.
The end of this saga is probably not yet written. The most obvious path for the City and the developers is to seek a new legislative authorization for the Willets Point West project, since it is clearly within the province of the Legislature to grant that permission.
In this respect, however, it should be kept in mind that the State has long had a policy of requiring some mitigation whenever it permits parkland to be put to some other use. Details of this policy, and how it is implemented, are found in the “Handbook on the Alienation and Conversion of Municipal Parkland in New York”11 published in 2012 by the New York State Office of Parks, Recreation & Historic Preservation. That policy generally requires the provision of substitute parkland for the lands being alienated, although there have been some exceptions allowed by the State Legislature.
The moral of the story is that local governments can avoid inevitable litigation, and the likelihood of adverse outcomes, by taking care to permit only park and park-related uses on designated parkland property. However, economic and political pressures frequently motivate governments into pushing the envelope in this regard, so it is likely that we haven’t seen the end of Public Trust Doctrine litigation.
1 __ NY3d __ (2017) 2017 NY Slip Op 04383.
2 95 N.Y.2d 623 (2001).
3 229 N.Y. 248 (1936),
4 15 N.Y.2d 221 (1965),
5 30 N.Y.2d 48 (1972),
6 22 N.Y.3d 648 (2014),
7 Supra note 4.
8 23 N.Y.3d 631 (2014)
9 Capruso v. Village of Kings Point, 102 A.D.3d 902 (2013)
10 Supra note 2.