Archives: Publications

Increased Employee Voting Rights in New York

With Election Day on the horizon, employers are reminded that changes to the election law this year afford employees in New York additional rights to time away from work to vote.

Under the new law, New York employers must provide employees with up to three hours of time off from work to vote without a loss in pay for any election.  Employees may take such time off from work either at the beginning or end of their shift.  In order to take advantage of this right, employees must advise their employer of the need for time off from work to vote no less than two working days before the election.

Previously, employers in New York were required to provide up to two hours of paid time off from work to vote only if an employee had less than 4 consecutive hours between the time polls opened and the start of their shift or between the end of their shift and the closing of the polls.  With the elimination of the 4 hour window as a prerequisite for receiving time off to vote, all employees are entitled to receive paid time off to vote.

Employers must pay employees their regular hourly rate of pay for time off to vote.  Tipped employees for whom their employer takes the tip credit should be paid at their full hourly rate of pay.  Exempt employees may not be docked pay and their paid time off, sick leave and vacation balances may not be reduced should they take such time off from work to vote.

Finally, employers must post a notice outlining employees’ rights to take time off from work to vote.  Such notice must be posted in the workplace no less than ten working days prior to every election.

Employers should review their employee handbooks and any workplace policies discussing time away from work to vote in order to ensure that their policies comply with the new legal requirements.  Moreover, employers should ensure that they timely post the required notice of employee rights.


For more information on Meyer Suozzi’s Employment Law practice, click here.


Three Weeks Until Deadline for Sexual Harassment Training

The deadline for New York employers to provide their employees with sexual harassment training is October 9, 2019.  Employers can fulfill their obligation to provide training through a variety of means including using a live trainer, presenting videos with an interactive
component, or using online modules with interactive components.

Please note that as of August 12, 2019, there are additional requirements for sexual harassment training.  Employers are now required to provide employees with the following at sexual harassment training:

  • A copy of the company’s sexual harassment policy;
  • A copy of the company’s sexual harassment complaint form; and
  • A copy of the materials presented at the training.

Given that many employers started their sexual harassment training prior to the change in law, employers should ensure that they have met the sexual harassment training requirements for all training performed post August 12, 2019.

For more information on Meyer Suozzi’s Employment Law practice, click here.


New York State Enacts Stricter Pay Equity Law and Bans Salary History Inquiries

On July 10, 2019, at the ticker tape parade celebrating the US Women’s National Team’s victory at the World Cup, Governor Cuomo signed two bills into law that require equal pay for equal work regardless of membership in any protected class and prohibit employers from asking prospective employees about their salary history.   Employers should be mindful of these changes and
re-evaluate their pay policies.

Expanded Pay Equity Law

Prior pay equity laws only prohibited differentials in pay due to an employee’s gender.  Under the expanded law, employers are prohibited from employee pay differentials based upon employee membership in any class protected under the New York State Human Rights Law (“NYSHRL”) including, but not limited to, age, religion, sexual orientation, disability, and marital status where employees perform equal or substantially similar work.  However, pay differentials will still be permitted where the differentials are based upon:

  • a seniority system;
  • a system that measures earnings based upon quantity or quality; or
  • a bona fide factor other than membership in a class protected by the NYSHRL such as education, training or experience that is job-related and consistent with business necessity.

While pay differentials are permitted under these circumstances, employees will be able to refute the
justification for the pay differential where they establish that the practice has a disparate impact upon a
protected class, that there is an alternative practice that would achieve the same purpose without the
disparate impact, and that the employer refused to adopt the alternate practice.

This law will go into effect on October 8, 2019.

Salary History Inquiry Ban

Following the enactment of similar laws on the local level in Albany, Suffolk and Westchester Counties and New York City, Governor Cuomo signed into law legislation barring employers from relying upon or inquiring about the salary history of a job applicant or current employee as a factor in deciding whether to hire the
applicant, promote the current employee or what salary to offer.  Moreover, employers are also prohibited from:

  • seeking, requesting, or requiring applicants or current employees to disclose their salary history as a condition of consideration for employment, an offer of employment or an offer of promotion;
  • seeking, requesting, or requiring applicants or current employees’ current or former employers or agents to disclose their salary history; and
  • refusing to interview, hire, promote, otherwise employ or retaliate against an applicant or current employee based upon salary history or their refusal to provide their salary history.

However, nothing in the law prohibits an applicant or employee from voluntarily, without prompting,
disclosing their salary history, including for the purposes of negotiation.  Moreover, an employer can confirm salary history after an offer of employment with compensation is made and the applicant or employee proffers their salary history for the purposes of negotiating a higher rate of compensation.

Violation of the ban on salary history inquiries may result in liability for damages, injunctive relive and
attorneys’ fees.

This law will go into effect on January 6, 2020.

What Employers Should Do

Employers should review their compensation practices to ensure that they do not disadvantage members of a protected class.  Moreover, they should review the salaries and wages paid to employees in substantially similar roles to ensure that their pay practices, though neutral, do not disparately impact members of a
protected class.  Where systems are required, such as a seniority system or one that measures earnings based upon quantity or quality, Employers must establish an actual system that is neutral towards protected classes, administered objectively and can be explained cogently in the event it is challenged.

Finally, Employers should review their hiring and promotional practices to ensure that their applications,
interview aids and documents used to aid in the internal promotions process are devoid of any sections where they seek information on applicants’ and employees’ salary history.

For more information on Meyer Suozzi’s Employment Law practice, click here.

New York State Passes Game Changing Legislation Expanding Workplace Harassment and Discrimination Laws

At the close of the legislative session, the New York State Legislature passed a series of bills having a broad impact upon the state’s anti-discrimination and anti-harassment laws.  The changes in law expand upon the sexual harassment reforms enacted last year and further amend the New York State Human Rights Law (“NYSHRL”).  When this legislation becomes effective, it  will impact every employer in New York State.

Expanding Coverage of the NYSHRL to All Employers

Currently, the NYSHRL applies only to employers with four (4) or more employees, except for claims of sex based discrimination, which applies to all employers regardless of size.  Under the new amendments, the entire NYSHRL will now apply to all employers, regardless of size.

Changes to the Burden of Proof and Viable Defenses in Harassment Claims

To establish a claim of harassment under current law, an employee must demonstrate that the alleged conduct was “severe and pervasive.”  The new NYSHRL amendments eliminate this standard.  An employee now needs only to establish that the alleged conduct subjected them to inferior terms, conditions or privileges of employment because they are a member of a protected class.  Moreover, the NYSHRL is now to be construed liberally to maximize deterrence of discriminatory conduct, even if such construction differs from federal law.

The NYSHRL amendments also diminish a long standing defense to harassment claims.  Previously, the Faragher-Ellerth defense allowed an employer to defeat a claim of harassment if it provided a procedure for reporting complaints of harassment, but the employee failed to follow the procedure, thus depriving the employer of the ability to address the alleged harassment.  Now, an employee’s failure to complain is not determinative of an employer’s liability.

Additionally, the NYSHRL amendments now expressly permit an employer to avoid liability for harassment when the employer can establish that the alleged conduct does not rise above the level of petty slights or trivial inconveniences, as viewed through the lens of a reasonable victim of discrimination who is a member of the same protected class.

Harassment Protections Expanded to Domestic Workers and Non-Employees

Last year, the state sexual harassment laws expanded the protections against sexual harassment to non-employees, such as contractors, vendors and consultants.  The new law further expands the state’s anti-harassment laws and now protect domestics workers and non-employees from harassment based upon any protected characteristic.  Thus, employers will now be liable for harassment of domestic workers, contractors, subcontractors, vendors, consultants and any others providing services in the workplace so long as the business knew or should have known that the individual was subjected to harassment in the workplace and took no corrective action.

Expanded Damages

While the NYSHRL currently does not allow successful claimants to recover punitive damages or attorneys’ fees, under the NYSHRL amendments successful claimants can recover punitive damages and “shall” be awarded attorneys’ fees.

Confidential Settlements and Mandatory Arbitration Agreements Prohibited

Last year’s changes to the NYSHRL prohibited non-disclosure clauses in settlement agreements for sexual harassment claims, unless the alleged victim expressly wanted such a clause.  The new NYSHRL amendments expand this provision to cover all discrimination claims.  As a result, confidentiality clauses may only be included in settlement agreements resolving discrimination claims where the alleged victim expressly desires such a clause.  Moreover, the individual must be given at least 21 days to review the agreement and 7 days to revoke the agreement after signing it.  Significantly, any confidentiality language must expressly permit the individual to participate in an investigation with law enforcement agencies, the Equal Employment Opportunity Commission (“EEOC”), the New York State Division of Human Rights (“NYSDHR”) and similar local agencies as well as to speak to an attorney retained by the employee.  Absent such a carve out, the confidentiality language is void.  The confidentiality language must also permit the individual to provide facts necessary to receive unemployment benefits, Medicaid or any other public benefit to which the employee may be entitled.  Further, the language must be both in English and the employee’s primary language.

The new law also expands last year’s prohibition of mandatory arbitration provisions in contracts to resolve complaints of sexual harassment.  More particularly, pursuant to the NYSHRL amendments, any agreement that requires mandatory arbitration of any discrimination claims will be prohibited.  Notably, however, just days after this legislation was passed, the United States District Court for the Southern District of New York ruled that the prohibition on mandatory agreements to arbitrate harassment claims is preempted by the Federal Arbitration Act and, therefore, invalid.  As a result, any such arbitration agreements may potentially be deemed enforceable should they be challenged in court (absent their unenforceability on other grounds).

Finally, the NYSHRL amendments expand confidentiality prohibitions beyond the settlement context.  Under the amendments, any  contractual provision between an employer and an employee or potential employee that precludes disclosing facts related to any future claim of discrimination is deemed void, unless the language advises the employee or potential employee that they are not prohibited from speaking with law enforcement, the EEOC, the NYSDHR, similar local agency, or an attorney retained by the individual.

Expanded Sexual Harassment Training and Policy Requirements

Employers must now provide their sexual harassment policy to employees in English and their native language at the time of hire and at their annual sexual harassment training seminar.  However, if the state does not publish a model sexual harassment policy in the language identified by an employee as their primary language, the employer need only provide the policy to that employee in English.  Employers must also provide employees with a copy of the training materials presented to employees at their sexual harassment training.

Expanded Statute of Limitations to File Claims with the New York State Division of Human Rights

The legislation extends the time period to file a claim of sexual harassment with the New York State Division of Human Rights from one (1) year to three (3) years.

Expanded Definition of Race Discrimination

The definition of “race” within the Education laws and NYSHRL has been amended to include “traits historically associated with race, including, but not limited to, hair texture and protected hairstyles.”  The phrase protected hairstyles refers to styles such as braids, locks, and twists.  This mirrors legislation passed earlier this year by the City of New York .

What Should Employers do Next?

While these revisions to the law will have a significant impact on all New York workplaces, employers can prepare to address the changes.  Employers should review their workplace harassment, discrimination, and dress code/appearance policies and ensure that their sexual harassment training programs are set up to comply with the new requirements.  Employers should also review their standard forms to ensure they do not run afoul of the new rules regarding confidentiality.  We recommend that employers take these steps as soon as possible because, once enacted, some of these changes go into effect immediately while others will go into effect over time.


For more information on Meyer Suozzi’s Employment Law practice, click here.


Wills, Trusts & Estates 2019 Client Alert – The 2020 Elections: A Stimulus to Use Your Transfer Tax Exemptions?

The upcoming 2020 federal elections have the potential to cause seismic changes to the estate planning landscape.  Should Democrats retake control of the White House and both chambers of Congress, drastic reductions to the estate, gift and generation-skipping transfer (GST) tax exemption amounts and tax rates may be implemented, accompanied by the possible rollback of several traditional estate planning vehicles.  A review of the current platforms of high profile Democratic candidates is a powerful inducement to take action now to use gift and GST tax exemptions and undertake planning opportunities while they are available.

Current Law  

The Federal estate, gift, and GST tax exemptions in 2019 are $11.4 million per individual.  These exemptions, which are indexed annually for inflation, were doubled in 2018 under the Tax Cuts and Jobs Act from $5 million per individual to $10 million per individual, and they are scheduled to revert back to $5 million per individual, as indexed for inflation (estimated at $6.7 million), at the end of 2025 unless new legislation is enacted.  The tax rate for transfers in excess of the estate, gift and GST exemptions is 40%.

Senator Bernie Sanders (D-VT)

Senator Bernie Sanders has advanced what may be the most sweeping and disruptive estate tax reform proposal.  His “For the 99.8 Percent Act,” introduced in January 2019, would significantly reduce current estate, gift, and GST tax exemption amounts and increase tax rates.  The Act would decrease the estate and GST tax exemptions to the 2009 level of $3.5 million, decrease the gift tax exemption to $1 million and increase the estate, gift, and GST tax rates from 40% to a maximum of 77%.

In addition, the Sanders proposal contains other provisions which would eliminate or restrict well-established estate planning techniques, including:

  • Elimination of valuation discounts for “nonbusiness assets” (assets which are not used in the active conduct of a
    business) held by an entity.
  • Elimination of minority discounts where a transferor, transferee, and members of the family of the transferor and transferee control a business or own the majority of the ownership interests (by value) in such business.
  • Limiting the total gift tax annual exclusion for transfers made in a calendar year to twice the annual exclusion amount.
  • Limiting the utilization of grantor retained annuity trusts (GRATs) by requiring a minimum term of 10 years for such trusts.
  • Requiring that the assets of a grantor trust less the amount of any taxable gifts made by the decedent to the trust be included in the grantor’s gross estate.
  • Limiting the utilization of dynasty trusts by eliminating the GST tax exemption for transfers to “non-qualifying trusts” with a duration of 50 years or more from creation.
  • Eliminating the use of Crummey Demand Powers in trusts, including irrevocable life insurance trusts.

Senator Elizabeth Warren (D-MA)

In January 2019, Senator Warren unveiled her “Ultra-Millionaire Tax,” a proposal for an annual tax of 2% on ultra-millionaires who own more than $50 million in assets and an annual tax of 3% on those who own more than $1 billion in assets.  There would also be a 40% tax penalty for those attempting to “evade” taxation by renouncing their U.S.

In March 2019, Senator Warren, along with Senator Kirsten Gillibrand (D-NY) and Senator Edward Markey (D-MA), introduced the “American Housing and Economic Mobility Act of 2019.”  The proposal would reduce the estate and gift tax exemption amount to $3.5 million.  It would also raise to 55% the estate, gift and GST tax rate on transfers of $3.5 million to $13 million, 60% on estates, gifts and transfers over $13 million and not over $93 million, 65% on estates, gifts and transfers of over $93 million and not over $1 billion, and 75% on estates, gifts and transfers of more than $1 billion.

Like the Sanders proposal, this proposal would require a 10 year minimum term for GRATs, require that assets of a grantor trust be deemed included in an owner’s gross estate for estate tax purposes, eliminate the GST exemption for transfers to trusts with a termination date of 50 years or more from creation, and limit the total gift tax annual exclusion for all transfers made in a calendar year to twice the annual exclusion amount.

Senator Joseph Biden (D-DE)

Senator Biden has not yet offered or introduced a specific estate tax reform proposal.  However,  in the past he has voted against raising the estate tax exemption from $1 million to $5 million, voted against making estate tax cuts permanent and voted against repealing the estate tax.

Senator Kamala Harris (D-CA)

Like Senator Biden, Senator Harris has not introduced a specific estate tax reform proposal, but has offered that she would use the estate tax to fund her proposal to give teachers a pay raise.  She has gone on record in the Washington Post that she would increase the estate tax on “the top 1 percent of taxpayers” and crack down “on loopholes that let the very wealthiest, with estates worth multiple millions or billions of dollars, avoid paying their fair share.”

The Time to Act is Now

This Alert is not intended to offer a prediction on the outcome of the 2020 elections or to opine on the merits of any particular proposal, but clearly there is a common theme in the Democratic candidates’ rhetoric and platforms.

Current law provides a tremendous opportunity for families to engage in estate planning right now, while estate, gift and GST tax exemptions remain at historic highs.  This is particularly true with the issuance of proposed regulations by the IRS in November 2018 providing that the use of any gift tax exemption under the Tax Cuts and Jobs Act will be grandfathered and not subject to “clawback” by the IRS.  Since the current law is scheduled to sunset on December 31, 2025 (to an estimated exemption of $6.7 million), the popular belief is that there is plenty of time to take advantage of the temporary exemption amounts.

If, however, the Republicans are swept out of office in the 2020 elections, the current exemptions could be materially curtailed to $3.5 million, and longstanding estate planning strategies may be swept away well before December 31, 2025.  While there is no guarantee that any technique undertaken now will not be adversely impacted under a new law, failure to act now could result in vanished planning opportunities.

Please contact us so that we can discuss the current estate planning strategies available for your particular circumstances before they potentially disappear.


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:


Patricia Galteri

(516) 592-5790

Nathaniel L. Corwin

(516) 592-5740


Jayson J.R. Choi

(516) 592-5799

Elisa Santoro

(516) 592-5724


Paul Millus Authors, “The Ins and Outs of a BCL § 1118 Hearing”

Counsel is presented with an opportunity to represent a petitioner (or a respondent) in a corporate dissolution proceeding. As petitioner’s counsel, a petition under N.Y. Business Corporation Law (“BCL”) § 1104 cannot be filed as the client does not own at least one-half of the votes of all outstanding shares of the corporation. However, as the client owns an excess of 20% of such shares, she is permitted to file under BCL § 1104-a. Respondent’s counsel receives the petition and has two choices: (1) defend on the grounds that a dissolution is not legally viable under § 1104-a or under “common law”; or (2) within 90 days after the filing of the petition, the respondent can elect to purchase the shares owned by the petitioner at their fair value “upon such terms and conditions as may be approved by the court” under BCL § 1118.

Why even consider opting to purchase the minority’s shares if respondent believes that dissolution should not be granted? There are a number of factors that can play into this decision. First, considering the fact that under BCL § 1118 the valuation will be as of the date of the filing of the petition, this may inure to the respondent’s benefit. Respondent may expect a marked change in the success of the company subsequent to the date of the filing of the petition now that the dissatisfied shareholder may no longer be involved in day-to-day operations. Respondent may also believe that, notwithstanding her fervent belief that dissolution is unwarranted, by electing to purchase the shares she removes the uncertainties that any litigation engenders and avoids the costs associated with fighting the aggrieved shareholder who has requested to exit the corporate entity. One of those risks is that if the dissolution is granted, there will be even more costs and court intervention as the company winds down its operations for the purpose of liquidating its assets to effect a distribution to petitioner and any other shareholders. This is a costly and risky proposition for any ongoing concern and may result in a diminution of the value of those assets throughout the dissolution process. Finally, respondent may have no interest in having to deal with the almost constant haranguing that an aggrieved shareholder may engage in – even if his initial attempt at dissolution was unsuccessful.

A decision is made to go the BCL § 1118 route, so what is next?

For either petitioner or respondent’s counsel what comes next is fairly formulaic. The matter is a special proceeding whose procedural aspects are governed by the provisions of Article 4 of the CPLR.[i] There will be an exchange of relevant financial documents which will eventually lead to a hearing where the court will determiner “fair value.” Where the BCL does not define “fair value,” courts are in agreement that “fair value” is the price which a hypothetical “willing purchaser, in an arm’s length transaction, would offer the corporation as an operating business.”[ii] Fair value is not ascertaining the value of an interest in the “throes of liquidation.”[iii] In such a proceeding, neither side has a burden of proof. Rather, it is the court that determines fair value based upon the evidence presented at the hearing, usually through the testimony of experts.[iv] Both sides also know that the date of valuation, as stated above, is the date prior to the date on which the petition was filed.[v] So how do the respective sides begin to determine “fair value,” and what other considerations are there for each side as they try to convince the court that their valuation is more accurate?

Pre-Hearing Prep

There should be no doubt that expert assistance in this matter is essential. Professional appraisers understand the valuation techniques regularly accepted in the industry and by the courts. While a lawyer involved in this line of work should have some working knowledge as to how a business is appraised, no lawyer can be expected to have the level of knowledge that a professionally-certified business appraiser has acquired over years of study. In addition, no matter what skills an attorney may have at cross examination of a business valuation expert, the court is going to want to have a competing valuation to compare and contrast against the valuation of the other side.

With that said, it is time to engage the services of an expert. What should counsel look for when hiring a business valuation expert? Certainly the expert should be “certified.” There are a number of organizations which require appraisers to go through a certification process. Some of the accrediting organizations are USPAP, NACVA, IBA and ASA.[vi] One should also look to an expert who has specific knowledge of the industry which she will be evaluating. The more the expert knows about the particular industry the better.

The expert should be engaged by counsel for their respective parties rather than the parties themselves.[vii] Unlike the attorney-client privilege, the client-accountant communication privilege is limited. However, when an attorney retains an accountant for his expertise to assist in client representation, the privilege will apply to attorney-accountant communications. In this “Kovel Letter,” the attorneys engage the accountant, specifying that the expert is assisting in representation of his specific client under the attorney’s direction, the expert is reporting directly to the attorney, all communications between the expert and the client and between the attorney and the client are privileged for the purpose of assisting the attorney, and that the attorney has ultimate control of the expert’s work and without written permission by the attorney the expert cannot disclose that to anyone.[viii]

There are essentially three predominant methodologies to determine fair value, to wit, (1) net asset value; (2) investment value; and (3) market value.[ix] Net asset value is an asset-based approach focusing on the balance sheet of the company and more appropriate for holding companies with significant tangible assets, i.e., family limited partnerships. Investment value is also known as the “income approach” which is to determine a value that is equal to the present value of future benefits such as revenues, operating profits and cash flow. This involves a capitalization of a single benefit stream or discounting multiple benefit streams. Finally, there is the generally-recognized market approach or market value. Market approach is determining value by observing transactions in the market place that are similar in nature thus ascribing value to the transaction at issue. For most closely-held corporations, it will be difficult to establish a market value approach because of the uniqueness of the company’s operations irrespective of the industry in which the company is involved. Moreover, there may not simply be enough comparables that are similar enough to warrant reliance on such an approach.

Concepts Counsel Should Be Aware Of

Although unquestionably the attorneys in a fair-value proceeding will be relying significantly on their experts, an understanding of several concepts that impact an expert’s valuation will be of great assistance to counsel. For example, but for petitioner forcing this issue through the initial filing for dissolution, it is highly unlikely that petitioner’s shares were readily marketable, and, more likely than not, there are significant restrictions in place preventing transfer of those shares. Nevertheless, under New York law there is no “minority discount” that may be applied in a BCL § 1118 valuation hearing to compensate the other shareholders for the minority shareholders’ lack of control. The rationale is a minority discount would deprive minority shareholders of their proportionate interest in a going concern which would result in minority shares being valued below that of majority shares, thus violating the courts mandate of equal treatment of all shares of the same class in minority stockholder buyouts.[x] However, a “marketing discount” or, as it is commonly known, a “discount for lack of marketability” (DLOM) may be applied to compensate for the lack of a ready market for the shares. However, note that no New York court has ever held that DLOM must be applied in a § 1118 proceeding, although courts have indeed recognized a DLOM.[xi] Also, DLOM is not designed to discount the value of the corporation or any particular asset, i.e., goodwill, but rather is to reflect the lack of marketability of the shares of the corporation.[xii]

Next, counsel should be aware of the possibility that the existence of an embedded capital gains tax or “B.I.G.” may be used to reduce the value of the corporation. The theory is that corporate holdings appreciate in value. As such, an event such as a dissolution could result in the liquidation of a particular asset or assets owned by the corporation, and, thus, a large capital gains tax will result upon the sale of such assets. In New York, it is recognized that embedded capital gains tax assets held by a C corporation will affect what a hypothetical willing purchaser with reasonable knowledge of the underlying facts will pay for the corporate stock. Universally, New York courts have consistently held that a hypothetical willing buyer will insist on a B.I.G. deduction.[xiii]

It has also been held that interest is payable to the petitioner from the date of the filing of the petition. As for the rate of interest, courts generally award an “equitable” rate of interest. In most cases, courts have determined that the “equitable” rate of interest should be the statutory rate of nine percent.[xiv] This is an easy default, but it can be challenged. The court may fix interest at a rate other than the statutory rate if the court finds “such deviance is warranted by the equities” and the court is provided with specifics as to why this should be done.[xv] In today’s low-interest environment, one may argue that nine percent interest is unwarranted coupled with other facts to support that position. There is also the question of whether the petitioner’s cost expenses in attorney’s fees can be awarded by the court. BCL § 1118 makes no provision for the imposition of court costs and disbursements. However, in Blake, it was determined that such awards are discretionary with the court.[xvi]

One factor that the lawyer can add to the expert-driven proceeding, and which may prove detrimental to either parties’ claim in terms of how much interest is awarded (or at all) or whether costs are assessed, is potential “bad faith” by either one of the litigants. Bad faith may be found in connection with one of the shareholders’ actions before the petition was filed or during the fair value proceeding.[xvii] If the court makes a determination that petitioner has acted in bad faith, it could affect the petitioner’s ability to receive prejudgment interest.[xviii]

In sum, notwithstanding the seemingly mechanical process by which value may be determined, the lawyer still has the ability to use his or her talents to affect the outcome.

[i]     See In Re WTB Prop., Inc., 291 A.D.2d 566 (2d Dept. 2002); see also In Re Quail Aero Serv., Inc., 300 A.D. 2d 800 (2d Dept. 2002).

[ii]    Matter of Pace Photographers (Rosen), 71 N.Y.2d 737, 748 (1988); Matter of Penepent Corp., 96 N.Y.2d 186, 193 (2001); and Matter of Seagroatt Floral Co., Inc. (Riccardi), 78 N.Y.2d 439, 445 (1991).

[iii]   Matter of Seagroatt Floral Co., Inc., 78 N.Y.2d at 445.

[iv]    Matter of Cohen, 636 N.Y.S.2d 994 (Sup. Ct., N.Y. Co. 1993), aff’d 240 A.D.2d 225 (1997).

[v]     See BCL § 1118.

[vi]    Uniform Standards of Professional Appraisal Practice (USPAP), National Association of Certified Valuation Analysts (NACVA), Institute of Business Appraisers (IBA), American Institute of Certified Public Accountants (AICPA), American Society of Appraisers (ASA):  CFA Institute (CFAI): Chartered Financial Analyst (CFA).

[vii]   The engagement letter should specify that the expert will solely look to the client for payment of all invoices.

[viii] U.S. v. Kovel, 296 F.2d 918 (2d Cir. 1961).

[ix]    Matter of Friedman v. Beway Realty, 87 N.Y.2d 161, 167 (1995).

[x]     Matter of Friedman, 87 N.Y.2d at 170.

[xi]    Seagroatt, 78 N.Y.2d at 442.

[xii]   Ferolito v. Arizona Beverages USA, 2014 WL 5834862, *18-19 (Sup. Ct., Nassau Co. 2014).

[xiii] Giaimo v. Vitale, 101 A.D. 3d 523 (1st Dept. 2012).

[xiv] See Giaimo, 101 A.D.3d at 526 (the court awarded prejudgment interest at the “equitable rate” of four percent).

[xv]   Rodriguez v. Estevez, 19 Misc.3d 1116(A) (Sup. Ct., N.Y. Co. 2008).

[xvi] Blake v. Blake Agency, Inc. 107 A.D.2d 139, 151 (2d Dept. 1985).

[xvii] McDaniel v. 162 Columbia Heights Housing Corp., 25 Misc.3d 1024 (Sup. Ct., Kings Co. 2009); Hall v. King, 177 Misc.2d 126 (Sup. Ct., N.Y. Co. 1998); Ferolito, 2014 WL 5834862 at *22.

[xviii] Id.


Reprinted with permission by the Nassau County Bar Association.

Client Alert: United States Department of Labor Proposes Increasing the Salary Threshold for Exempt Employees to $35,308

On March 7, 2019, the United States Department of Labor released its long-gestating plan to increase the number of individuals eligible to earn overtime under the Fair Labor Standards Act (“FLSA”).  Under the proposed rule, individuals earning less than $35,308 per year ($679 per week) would be eligible to earn overtime.

Overtime and its Exceptions

The FLSA requires that employers compensate its employees at time and a half for all hours worked over forty (40) in a workweek unless that individual is exempt from earning overtime.  Generally, in order to be exempt from overtime, individuals must pass both a duties test and a salary basis test.  The duties test requires an employer to establish that the employee is either an executive employee (primarily responsible for managing the company, directs the work of 2 or more employees and has the ability to affect individuals’ job status) or an administrative employee (performs office or non-manual work related to the management or operation of the company and exercises discretion and independent judgment).  The salary basis test requires that an individual earn above a certain salary on a weekly basis.

The Proposed Changes to the Salary Basis Test

Under current law, an individual must earn $23,660 (or $455 per week) in order to pass the salary basis test.  The propose rule would require an individual to earn $35,308 per year (or $679 per week) in order to pass the salary basis test.

The Impact of the Proposed Rule

The proposed rule would result in more than one million workers becoming eligible to earn overtime under the FLSA.  Employers should review the salaries of their exempt employees in order to determine whether their exempt employees would pass the salary basis test under the proposed rule.  If there are any exempt employees who would no longer be exempt, employers should determine whether to increase that employee’s salary or reclassify them as a non-exempt employee.  However, employers should also examine applicable state law as many states, such as New York where exempt employees must earn between $832.50 and $1,125.00 per week depending upon location, have a higher minimum salary threshold in order for individuals to pass the salary basis test.

What’s Next

The proposed rule will be published shortly in the Federal Register.  Once the proposed rule is published, it will be subject to a 60-day public comment period.

Client Alert: NYS Legislature Brings New Hope to Child Sexual Abuse Victims

Victims of child sexual abuse have a powerful new weapon to achieve justice against their abusers.

On January 28th, 2019,  the New York State Legislature approved a bill greatly increasing the time within which a person who was sexually abused as a child
(under age 18) may bring a civil suit against the person or institution causing or allowing the abuse.

The period of time (statute of limitations) allowed for criminal prosecutions of such crimes was also increased.   The Bill applies the Criminal Law statute of limitations for the specific crime and begins to run from the person’s twenty-third birthday or from the time the offense is reported to a law enforcement agency or statewide central register, whichever occurs first.

Notice of claim provisions (which generally require written notice to a municipality within 90 days of an event) are eliminated in cases of child sexual abuse.

This Bill was passed in response to recent widespread findings of sexual abuse of children in religious institutions and other settings.

Child sexual abuse victims may now bring suit for sexual abuse until they reach age fifty-five.  There is a one-year extension to commence suit for those over the age of fifty-five. This extension begins six months from the time the bill is signed into law.  It is expected that the governor will sign this bill immediately.

If you or someone you know is a victim of child sexual abuse, you should consult an attorney, even if you have been told previously that no legal action could be taken.


For more information on Meyer Suozzi’s Personal Injury Law Practice, click here.

Client Alert: 2019 Wills, Trusts & Estates Winter Alert

A year has elapsed since the Federal Tax Cuts and Jobs Act (the “TCJA”) became effective1 and it has been nearly five years since New York’s estate tax law was last overhauled.  Since New York’s estate tax law changes were scheduled to become fully phased-in as of January 1 of this year, now is an excellent time to review the key principles under the Federal and New York State transfer tax laws, along with planning opportunities to which taxpayers may avail themselves in the current favorable wealth transfer environment.


  • The Federal estate and gift tax exemption for 2019 has increased to $11.4 million per person, from $11.18 million in 2018. The exemption, which is indexed annually for inflation, was temporarily doubled in 2018 from $5 million (indexed for inflation) under the TCJA and is set to return to $5 million (indexed for inflation) at the end of 2025.
  • Federal estate and gift taxes are “unified” under a single transfer tax system, with a unified rate schedule, and a unified credit. Taxable gifts made during lifetime reduce the amount of the exemption available for estate tax purposes at death.
    • Because of the structure of the unified gift and estate tax system, the TCJA recognized the possibility that taxpayers may prior to 2025 make sizeable gifts that are within the TCJA’s increased exemption amount, but die after 2025 when the exemption has reverted to $5 million, resulting in the deceased taxpayer
      having used more than the available exemption.  This circumstance is commonly referred to as a “clawback” scenario, and the TCJA includes language authorizing the Treasury to prescribe IRS regulations to address the issue.  The IRS issued proposed regulations in November of 2018 that provide that taxpayers who take advantage of the increased exemption will not be adversely affected by the post-2025 decrease in the exemption.  The regulations have not yet been adopted as final.
    • Present interest gifts that do not exceed the statutory gift tax exclusion amount will not reduce the amount of exemption available for estate tax purposes at death.  The gift tax exclusion amount is $10,000, indexed for inflation occurring after 1997.  The exclusion amount for 2019 is $15,000, unchanged from 2018.  The exclusion covers gifts a donor makes to each donee, each year.  If the donor of the gift is married, gifts to donees made during a year can be treated as split between the spouses, even if the gift is actually given to a donee by only one of them, by the filing of a gift tax return signed by both spouses.
  • Federal Provisions For Married Taxpayers.
    • Married taxpayers may leave an unlimited amount of assets to a spouse and qualify for the marital deduction, if such assets are given outright, or in a qualifying trust, typically a “qualified terminable interest property trust” (“QTIP Trust”).  At the surviving spouse’s death, such assets may be subject to estate tax depending upon the surviving spouse’s available exemption.
    • Under the portability provisions initially implemented in 2010, any Federal gift and estate tax exemption that remains unused at the death of a spouse is generally available for use by a surviving spouse, as an addition to the surviving spouse’s exemption, through the timely filing of a Federal estate tax return.  A surviving spouse may use the predeceased spousal carryover amount in addition to his or her own Federal exemption for taxable transfers made during life or at death.  The amount received by the surviving spouse is called the deceased spousal unused exclusion, or DSUE amount.
    • The Generation-Skipping Transfer Tax (GST) is the Federal transfer tax which may be imposed on transfers that “skip” a generation (generally transfers by gift or at death to grandchildren and more remote descendants). The GST tax is in addition to gift and estate taxes.  Currently, the GST exemption amount runs in tandem with the gift and estate tax exemption and is $11.4 million as of January 1, 2019, scheduled to revert to $5 million at the end of 2025, as indexed for inflation. The portability rules do not apply to the GST Exemption.
    • The Federal estate, gift and GST tax rate remains at 40%.

New York State

  • The NYS estate tax exemption (the “NYS Basic Exclusion Amount”) for 2019 has increased to $5.74 million from its previous level of $5.25 million. In future years, the exemption will be adjusted annually for inflation, to equal the amount of the Federal exemption prior to and as if the TCJA had not been enacted.2
    • New York’s estate tax law includes a quirky feature commonly known as the “cliff.”  If the New York taxable estate exceeds the Basic Exclusion Amount by more than 5%, the credit is phased out completely and the entire taxable estate will be subject to NYS estate tax.  This tax structure has been referred to as “confiscatory,” in that it can lead to the absurd result of causing the beneficiaries of estates between $5,740,000 and approximately $6,286,700 to receive, after estate taxes, less than the beneficiaries of an estate valued at $5,740,000.  Taxpayers whose estates are valued near the “cliff” may wish to include a formula provision, sometimes referred to as a “Santa Clause,” pursuant to which a portion of the estate will pass to charity if the formula results in the imposition of less NYS estate tax.
  • New York does not impose a gift tax. A temporary provision requiring inclusion of gifts made within 3 years of death in the gross estate of a New York resident decedent sunsetted on January 1, 2019, but the recently released Fiscal Year 2020 NYS Executive Budget includes proposed legislation that would extend the sunset to January 1, 2026, to coincide with the expiration of the increased exemptions under the TCJA. The proposed law must now make its way through the NYS Legislature, but passage seems likely in light of the current political configuration in Albany.
  • NYS Provisions For Married Taxpayers.
    • An unlimited marital deduction is available under New York’s estate tax law.
    • New York law does not provide for spousal “portability” to allow a surviving spouse to use his or her deceased spouse’s unused gift and estate tax exemption.
  • New York does not impose a GST tax for transfers made on or after April 1, 2014.
  • The top New York estate tax rate is 16%.

Planning Considerations

  • Credit Shelter Planning. While the federal exemption amount, coupled with federal spousal portability, currently renders it possible for married couples to shelter from federal estate tax up to $22.8 million without the need to rely on complex testamentary documents, credit shelter trust planning for married couples nevertheless continues to occupy a vital estate planning role for several reasons.
    • State Estate Taxation.  New York is one of a handful of states that continues to impose a separate estate tax, and does not recognize spousal portability.  Accordingly, credit shelter planning is necessary so as not to lose the benefit of the NYS exemption of the first spouse to die.
    • Trust Protection.  Establishment of any trust can provide protections not present with an outright distribution.  These include protecting assets from both the beneficiary, a divorcing spouse, and third-party creditors, and providing greater assurance that children and grandchildren will receive an inheritance.
    • Asset Appreciation. The potential for asset appreciation is a consideration which runs across a range of planning concerns.  Establishment of a credit shelter trust may prevent the post-transfer appreciation in the value of the assets from being subject to estate tax on the death of the survivor.  However, no income tax basis step-up will be available for the assets held in a credit shelter trust upon the death of the surviving spouse.
    • Formula Planning Caution.  Testamentary formulas based on the federal exemption amounts, including credit shelter planning (as well as GST formula planning), must be reviewed periodically, particularly in times such as the last several years when exemption amounts have changed dramatically.  The new exemptions may result in overfunding or underfunding amount passing to or for the benefit of a surviving spouse, and may result in an unnecessary state estate tax.
  • Sunsetting and Potential Earlier Repeal. The increased estate, gift and GST exemptions, currently at $11.4 million per person, are temporary and set to expire automatically on December 31, 2025.  Currently, available planning options may be lost if action is deferred until the eleventh hour.  Moreover, in the present unsettled political climate, it is conceivable that the increased exemption amount could be lowered prior to 2025. A Presidential election will be held in 2020, and several potential Presidential candidates have voiced proposals to ratchet the exemptions back to $5 million and lower.  For instance, Senators Cory Booker, Bernie Sanders and Elizabeth Warren have each floated separate proposals that would lower the exemption to the pre-2010 threshold of $3.5 million, coupled with higher maximum rates.
    • Gifting.  Lifetime gifting, outright or in trust, can result in substantial transfer tax savings.  Gifting provides the benefit of removing the post-transfer appreciation in the value of the assets from the donor’s estate.  For New York domiciliaries, since a State estate tax is imposed but not a gift tax, gifts can result in a substantial reduction in State estate tax liability.  Many gifting vehicles, moreover, offer discounting advantages that may be absent from or less effective than those associated with transfers at death.  However, 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 taxpayers who 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.  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.  For those who have previously established a Dynasty Trust, consideration should be given to making additional gifts to the Dynasty Trust to take advantage of the increased federal exemption and the inflation adjustment.
      • 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.
      • Qualified Personal Residence Trusts (QPRTs).  QPRTs are a popular vehicle for making a gift transfer, in trust, at a reduced gift tax cost of a personal residence in exchange for its continued use rent-free for a term of years.  At the expiration of the term, the residence passes to family members at no additional gift or estate tax cost.  The effectiveness of a QPRT generally increases with higher interest rates.
      • Grantor Retained Annuity Trusts (GRATs). A GRAT is a trust to which a donor irrevocably gifts assets, and in return receives an annuity for a fixed term of years. The value of the gift is equal to the fair market value of the property transferred to the GRAT minus the value of the retained annuity, calculated using the monthly interest rate under Internal Revenue Code §7520 in effect at the GRAT’s inception. Where the present value of the annuity equals the original contribution (a “near zeroed-out GRAT”), the value of the taxable gift will be nominal. Upon expiration of the fixed term, provided the donor is living, any remaining assets in the GRAT pass to the beneficiaries free of gift tax. GRATs are interest rate sensitive (the January 2019 rate is 3.4%) and as rates rise, the ability to outperform the §7520 rate becomes increasingly difficult. Thus, a GRAT may be suitable only for gifts of high income and/or appreciating assets.
      • Intentionally Defective Grantor Trusts (IDGTs).  Assets gifted to an IDGT are removed from the donor’s estate for gift and estate tax purposes, but the donor remains responsible for payment of income taxes, which payments are, in effect, additional non-gift taxable transfers to the IDGT.  In addition, an IDGT provides a vehicle for selling assets of the donor to the IDGT, without incurring a capital gain, in exchange for a promissory note.


Current law provides tremendous opportunities to transfer wealth and should be taken as a call to action to review your existing estate plan and, where appropriate, to implement planning opportunities provided by the temporary increased Federal exemptions.

1The Tax Cuts and Jobs Act, which became effective on January 1, 2018, implemented sweeping changes to the Internal Revenue Code, including the doubling of the estate, gift and generation-skipping tax exemptions from $5 million to $10 million per person, indexed for inflation occurring after 2011.  The inflation adjustment index was also changed.  Prior law based the computation on the Consumer Price Index for all Urban Consumers (“CPI-U”).  Under the Tax Cuts and Jobs Act, the inflation adjustment is based on Chained CPI-U (“C-CPI-U”), which generally produces a slower growing CPI calculation than the CPI-U calculation.
2Unlike Federal law under the TCJA, the State of New York continues to base its inflation adjustment computation on the Consumer Price Index for all Urban Consumers

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:

Patricia Galteri (516) 592-5790 Nathaniel L. Corwin (516) 592-5740
Jayson J.R. Choi (516) 592-5799 Elisa Santoro (516) 592-5724