For the second year in a row, Christian has been recognized by his peers in Super Lawyers as a Rising Star. This distinction is limited to less than 2.5 percent of attorneys in New Jersey.

OlenderFeldman is proud to congratulate Christian Jensen on being named one of Super Lawyers’ 2014 Rising Stars. The New Jersey Rising Stars list is limited to lawyers who are 40 years old or less or have been in practice for 10 years or less and is comprised of no more than 2.5% of the lawyers in the state.

Christian focuses his practice with OlenderFeldman in the areas of complex commercial litigation and intellectual property litigation, including business and consumer fraud, construction and employment law. For more information about Christian please click here.

Effective immediately, all New Jersey employers are required to treat pregnancy as a protected characteristic under the New Jersey Law Against Discrimination (“NJLAD”), as well as to provide reasonable accommodations when a pregnant employee requests an accommodation based upon advice of her physician, unless it would cause an undue hardship to the employer. 

The purpose of this Client Alert is to address some of the Frequently Asked Questions we have received from our clients about the new amendment to the New Jersey Law Against Discrimination.

What types of reasonable accommodations must be afforded pregnant employees?

Reasonable accommodations include, among other things, bathroom breaks, breaks for increased water intake, periodic rest, assistance with manual labor, modified work schedules and temporary transfers to less strenuous or hazardous work.

What are the variables that determine whether a request for a reasonable accommodation would cause an undue hardship upon an employer? 

There are a number of factors that are evaluated under the NJLAD as to whether a reasonable accommodation actually causes an undue hardship, including, among other things, the size of the business, number of employees, type of operations, the composition of the work force, the nature and cost of the accommodation required, and whether the accommodation would require the employer to ignore or waive the employee’s essential job functions in order to provide the accommodation.

When is leave required?

Pregnant employees are entitled to paid or unpaid leave as a reasonable accommodation in the same manner provided to other employees not affected by pregnancy.  So, for example, if the employer has a disability leave policy, that policy must be adhered to for any pregnant employee.  We recommend that all employers consider the implementation of a disability leave policy, even if they are not required to provide leave under the Federal Family and Medical Leave Act (“FMLA”) or New Jersey Family Leave Act (“NJFLA”) due to the size of their business.   Such policy can flexibly permit employers to provide  reasonable accommodations while at the same time meet their business needs and objectives.

For example, employers can create an unprotected disability leave policy (assuming they do not have 50 or more employees, in which case they must provide leave under the FMLA or NJFLA) that requires their employees to exhaust their sick, vacation and personal days (paid time off) as a condition of taking such leave.  Where an employee requires additional time off beyond paid time off, the employee is placed on unpaid leave with no assurances of being returned to the position they held with the employer prior to taking such leave.  The employee’s ability to return to work following the end of his or her disability leave can be evaluated based upon on the employer’s business needs when the employee is in fact capable of returning to work.

Is a separate notice regarding reasonable accommodations or pregnancy discrimination required to be posted under the NJLAD?  

No.  The Division on Civil Rights requires employers to display the Division’s official poster in a place where it will be visible to employees and applicants.  We anticipate that the Division will amend its official poster and employers will be advised to display the new poster as soon as practicable thereafter.

OlenderFeldman LLP Data Protection and Privacy lawyers Michael Feldman and Jordan Kovnot will attend the International Association of Privacy Professionals (IAPP) Global Privacy Summit, to be held March 5-7 in Washington, D.C.

The event will feature thousands of privacy industry professionals participating in dozens of educational sessions ranging from FTC compliance, cloud computing, big data privacy, cybersecurity, data breach response, the NIST Cybersecurity Framerwork, COPPA and more. If you would like to meetup with Michael or Jordan, please send them an email or contact us using the contact form. We hope to see you there.

Insider threats, hackers and cyber criminals are all after your data, and despite your best precautions, they may breach your systems. How should small and medium sized businesses prepare for a cyber incident or data breach?

Cyber attacks are becoming more frequent, are more sophisticated, and can have devastating consequences. It is not enough for organizations to merely defend themselves against cyber security threats. Determined hackers have proven that with enough commitment, planning and persistence to breaching an organization’s data they will inevitably find a way to access that information. Organizations need to either develop cyber incident response plans or update existing disaster recovery plans in order to quickly mitigate the effects of a cyber attack and/or prevent and remediate a data breach. Small businesses are perhaps the most vulnerable organizations, as they are often unable to dedicate the necessary resources to protect themselves. Some studies have found that nearly 60% of small businesses will close within six months following a cyber attack. Today, risk management requires that you plan ahead to prepare, protect and recover from a cyber attack.

Protect Against Internal Threats

First, most organizations focus their cyber security systems on external threats and as a result they often fail to protect against internal threats, which by some estimates account for nearly 80% of security issues. Common insider threats include abuse of confidential or proprietary information and disruption of security measures and protocols. As internal threats can result in just as much damage as an outside attack, it is essential that organizations protect themselves from threats posed by their own employees. Limiting access to information is the primary way businesses can protect themselves. Specifically, businesses can best protect themselves by granting access to information, particularly sensitive data, on a need-to-know basis. Logging events and backing up information, along with educating employees on safe emailing and Internet practices are all crucial to an organization’s protection against and recovery from a breach.

Involve Your Team In Attack Mitigation Plans

Next, just as every employee can pose a cyber security threat, every employee can, and should, be a part of the post-attack process. All departments, not just the IT team, should be trained on how to communicate with clients after a cyber attack, and be prepared to work with the legal team to address the repercussions of such an attack. The most effective cyber response plans are customized to their organization and these plans should involve all employees and identify their specific role in the organization’s cyber security.

Draft, Implement and Update Your Cyber Security Plans

Finally, cyber security, just like technology, evolves on daily basis, making it crucial for an organization to predict and prevent potential attacks before they happen. Organizations need to be proactive in the drafting, implementing and updating of their cyber security plans. The best way for an organization to test their cyber security plan is to simulate a breach or conduct an internal audit which will help identify strengths and weaknesses in the plan, as well as build confidence that in the event of an actual cyber attack the organization is fully prepared.

If you have questions regarding creating or updating a disaster or cyber incident recovery plan, please feel free to contact Aaron Messing at 908-624-6293 or using our contact form below.

Contact OlenderFeldman LLP

We would be happy to speak with you regarding your issue or concern. Please fill out the information below and an attorney will contact you shortly.

Collection of Location Data Enables Personalized Recommendations; Creates Privacy Concerns

Location data is becoming increasing valuable to companies, who can use this information to build detailed profiles of individual’s preferences and activities, including where they live, work and shop.  Location data can be collected from all Wifi-enabled smartphones, which have a persistent identifier that can be tracked without notifying the user.  Companies can also determine which Wi-Fi networks a phone has logged into.

Although this information can enable companies to provide individually tailored services and products, many have raised concerns about the privacy implications of this type of tracking. For example, a company could infer that an individual has a medical condition based on trips to health care providers.  Additionally, companies are increasingly able to connect online and offline behaviors into a composite profile.

Please click here to see Aaron Messing’s  interview with Fox News concerning location privacy.

The Original vs. The Copy – Does It Really Matter From An Evidentiary Perspective?

While there are many hurdles a business document needs to overcome in order to be admitted as evidence in court, there is one hurdle that many clients routinely inquire about – the legality and admissibility of digital image copies, in lieu of original documents. While lawyers recognize this as a best evidence issue, a legal doctrine that states an original piece of evidence is superior to a copy, for clients this is a matter of whether they need to retain an original signed contract or could they save space in their file cabinets and rely on a scanned copy on their hard drive. Although state laws concerning admissibility of evidence vary, states have generally adopted the language, in whole or part, of the Uniform Rules of Evidence (“URE”) and/or the Uniform Photographic Copies of Business and Public Records as Evidence Act (“UPA”). For the purpose of this article the differences between the URE and the UPA are not important or relevant. Accordingly there is a nationwide consensus that a digital image copy can generally overcome a best evidence challenge and be admitted as the original document.

The fundamental basis for states admission of digital duplicates can found in the URE, which allows copies that are established as business records to be admitted into evidence “to the same extent as the original.” Duplication is permitted by any technique that “accurately reproduces the original.” Similarly under the UPA, duplicate records are admissible as the original, in judicial or administrative proceedings, provided that the duplicate was generated by a “process which accurately reproduces the original.” The UPA permits the destruction of original documents, unless preservation is required by law (i.e. wills, negotiability documents and copyrights). Hence, the law permits the destruction of original documents subject to certain evidentiary requirements.

When read together and interpreted by the majority of states, the URE and the UPA allow duplicate copies to be given the same evidentiary weight as originals, so long as those copies are properly generated, maintained and authenticated. Therefore, clients are encouraged to adopt certain practices when copying their business documents:

  • The copies should be produced and relied upon during the regular course of business.
  • The business should have a written policy specifying the process of duplication, as well as where and how copies will be stored. This written policy should be made available to the business’s custodian(s) of records.
  • The business’s written policy should include a requirement that at least one witness be present at the time of duplication that would be available to testify under oath that the generated duplicate accurately and completely represents the original.
  • The business’s written policy should be subject to regular review in order to ensure the stated compliance procedures are satisfied.

Ultimately, clients should feel free to indulge their desire to “save the space” and dispose of an original contract, so as long as the above duplication practices are adhered to and all other relevant evidentiary and other legal requirements are satisfied. Clients should also be aware that since the medium for storing electronic records must meet certain legal standards, their choice of hardware is critical when it comes to admissibility of a duplicated record. Given the variety of legal and technological nuances that need to be taken into consideration, when in doubt it is always best to seek the guidance of a qualified and experienced attorney to avoid any potential legal pitfalls. The above article reflects the national trend in the United States and so to ensure that your business has complied with state and/or country specific regulations it is once again best to contact a qualified and experienced attorney who practices in your jurisdiction.

JK! LOL! I Did Not Mean to Post That – California Now Requires That Children Be Provided With a “Cyber Eraser”

By Angelina Bruno-Metzger

Of the new cyber laws signed by California Governor Jerry Brown, by far the most publicized and debated has been bill SB568, which provides minors with greater cyber privacy rights. There are two main components of this new law: (1) it requires website operators and mobile application owners to allow minors to remove their postings, and (2) it places stronger restrictions on the type of products website operators can market and advertise to minors. The main sentiment and policy initiative behind this new law is clearly well-intentioned: to allow minors who are prone to posting rash and often emotionally charged content online without any awareness or concern of the future implications of that decision, to remove the harmful and offending content whether the regret comes five minutes later, or years later.

The first part of this law, the “internet eraser”, applies to two main categories of web providers; those that operate web sites, provide online services, or have mobile applications that are directed at minors and the second category applies to those same providers that have actual knowledge that a minor is using their site, services or mobile application. This eraser however, does not require the website operator to delete the information from its server. Instead, an operator will be deemed to have complied with this removal requirement by simply ensuring that the content is no longer visible to other users. As with many laws there are several notable exceptions, and this new internet eraser law is no different. In fact, there are multiple scenarios in which a web site operator is not under a removal obligation. Examples of these exceptions include: posts made anonymously by minors, as well as any content posted by a minor for which the minor received compensation (or other consideration) and only minors that are registered users of a site, service or application may seek to have their content removed.

The second part of this law involves the limitation of marketing and advertising of specified products to minors on websites and mobile devices. Predictably, those specified products include certain dietary supplements, permanent tattoos, alcohol, firearms, fireworks, lottery tickets and e-cigarettes. A website operator will be deemed to be in compliance with this new law if it has properly notified its advertising services that its site, service or application is directed towards minors. Essentially, if a company could not sell a product face-to-face to a minor, under this new law a company cannot solicit or sell that same product to a minor online.

This law will become effective on January 1, 2015, and already legal experts from around the country are debating whether or not this is a direct collision of privacy law and the First Amendment. Additionally, as with all cyber laws, there remains an enormous amount of ambiguity to address. For example, does the person need to be a minor when they request removal or can an adult retroactively ask for removal of a posting made while a minor? Will this law apply to all websites in the country or just to those based in California? As currently written, this new law does not included a time frame in which the operator needs to delete the requested content. Moreover, the scope of the content to be deleted remains unclear, and there is no penalty for an operator that does not comply with a request.

Stay tuned to see how the implementation and enforcement of this law plays out. For now, review our prior postings about the best ways to navigate the social media and the workplace, as well as understand the limitations of privacy on Facebook.

 

WARNING: Your Account Has Been Compromised – California Expands Existing Data Privacy Breach Law

By Angelina Bruno-Metzger

Governor Jerry Brown recently signed bill SB46 into law, which amends California’s data breach notification law by expanding the definition of “personal information.” The current law requires alerts to be sent to consumers when a database has been breached in a way that could expose a consumer’s social security number, driver license number, credit card number(s), or medical/health insurance information. Under this new amendment, website operators will be obligated to send out privacy notifications after the breach of a “user name or email address, in combination with a password or security question and answer that would permit access to an online account.” Additionally this law requires notifications, even when no other personal information has been breached, in cases when a breach of a user name or email address used in combination with a password or security question could permit access to an online account. Currently, as with the new “Do Not Track” law, California is the only state whose breach notification statute incorporates breaches solely by the loss of a user name or email address.

This law will go into effect on January 1, 2014 and a company’s notification obligations under this new law are different depending on the type of personal data that has been breached. When the security breach does not involve login credentials for an email account, the operator is allowed to notify affected customers through the use of a “security breach electronic form”. This form would direct the person whose personal information has been compromised to immediately change his/her password and security question(s) or answer(s) – as well as direct the user to take appropriate precautionary measures with all other virtual accounts that use the same user name or email address and password. However, when the security breach does involve login credentials for an email account the operator, logically, may not provide notification to that email address. Alternatively, the operator may provide “clear and conspicuous notice delivered to the resident online when the resident is connected to the online account from an IP address or online location from which the person or business knows the resident customarily accesses the account.”

As with the other recently passed cyber laws, the implications of this new data privacy breach law will likely be felt nationally and internationally, as almost every company that offers online personalized services requires a consumer to create a username and password. While there remains some uncertainty about exactly what businesses must abide by this new regulation, as not all companies can readily, if at all, confirm affected users are California residents, since sharing of home addresses is often optional, it is best for businesses to abide by the old “better safe than sorry” adage. The two best ways companies can come into compliance with this regulation are to: (1) ensure that all usernames, passwords, security questions and answers are stored in an encrypted form, and (2) update existing protocols, or create new internal protocols that are consistent with this law’s reporting requirements.

See OlenderFeldman LLP’s information privacy lawyer Aaron Messing’s predictions for what should happen in 2013 within the data privacy field and compare it with this new data privacy breach law in California.

Sharing is Caring, but Not Always in the Case of Cookies – CA Governor Signs the Country’s First “Do Not Track” Disclosure Bill

by Angelina Bruno-Metzger

On September 27, 2013, bill AB370, now known as the “Do Not Track” disclosure law (“DNT”), was officially signed into law by Governor Jerry Brown. This law will impose new and additional disclosure requirements on commercial websites and online services that collect personally identifiable information (“PII”) on users. “Do Not Track,” is an amendment to the California Online Privacy Protection Act (“CalOPPA”), which originally required that websites, as well as mobile applications, to explicitly and conspicuously post their privacy policies. This posted privacy policy must include what categories of PII are being collected and what third parties will also have access to that information. Under this latest amendment, website operators (or mobile applications) need to: (1) disclose and explain their privacy policies and how they respond to DNT signals, and (2) disclose applicable third-party data collection and use policies.

It should, however, be noted that this law does not explicitly prohibit tracking or affirmatively require a website operator to honor a consumer’s do not track request. It simply mandates that operators disclose their privacy policies. Additionally, the lack of a clear definition of “do not track” could be equally problematic when it comes to enforcement – since this new law does not define what it is regulating. A clear definition will most likely emerge through enforcement and adjudication of the law, as well as policy statements.

This “Do Not Track” law mandates that all companies have a complete technical understanding of their websites, as well as the third parties that are allowed to operate on the site, so that each company can fully disclose its data collection practices. While technically speaking this law would only require companies to make the disclosures to California residents, it will likely have a national, if not international, effect, as most companies usually do not craft different policies for specific states, and cannot know whether a user is a California resident. This new law will go into effect on January 1, 2014, and any operator that fails to provide the required disclosures will be given a warning and 30 days to comply or else be found in violation of the new law. Failure to comply, whether that failure is knowing and willful or negligent and material, could result in a $2,500 fine under California’s Unfair Competition Law.

Recently California has been boldly breaking ground in the nation in the area of online data privacy, and the “Do Not Track” law is no exception; it is the first of its kind in the country. For a more complete understanding of what online tracking is and how it works, please see our previous post Behavioral Advertising and “Do Not Track” Navigating the Privacy Minefield

Effective April 1, 2014, businesses with a New York City office that have 20 or more employees working out of such office are required to provide five paid sick days per calendar year to their employees.  (The law will expand to employers with 15 or more employees starting October 1, 2015.)   Businesses with fewer employees working out of an office in New York City do not have to provide paid sick time, but must allow their employees five unpaid sick days.

 The purpose of this Client Alert is to address some of the Frequently Asked Questions we have received from our clients about the new employment law. As we often stress, simple employment mistakes are often quite costly to fix:

Q.    Does the law apply only to full-time employees?  No.  The law applies to all employees whether full-time, part-time, temporary or seasonal, as long as they work more than 80 hours in a calendar year.

Q.    Does it matter whether the principal location of the business is in New York City?  No.  The law applies to any business as long as the business has employees based out of a location in New York City.  Employers with offices in different states need only accommodate employees working in New York City with the leave time required under this law.

Q.    Are there any limitations to the use of sick time?   Almost none.  Employees may use sick time for absences due to their own illness, injury or health condition or the illness, injury or health condition of a family member.  In addition, the law allows sick time if the place of business is closed due to a health emergency or the employee must take care of a child whose school or care provider has been closed under similar circumstances. 

Q. Do the five days need to be provided automatically to new employees?  No.  New employees can be required to work at least four months before they can use the sick days. 

Q.    How are the sick days accrued per year?  Employees will accrue one hour of sick time for every 30 hours worked, and are entitled to 40 hours per calendar year.

Q.    Can the employer insist on documentation if the employee uses multiple days on a consecutive basis?  Yes.  The law permits employers to require reasonable documentation for sick time lasting more than three consecutive work days.

Q.    Does the law require businesses to extend any existing sick leave policy by the five days covered under the law?  No.  Employers who already provide at least five days of leave time (40 hours per calendar year) for the same paid leave usage and under the same conditions as leave time required under the new law are not required to provide additional sick time.

 Q.    Do the five days carry over from year to year?  Yes.  But the business may cap usage of accrued unused sick days to a maximum of 40 hours in a calendar year.

 Q.    Are businesses required to notify the employees about this change in the law?  Yes.  Written notice of rights must be provided to the employee at commencement of employment. 

 If you have any questions, please feel free to contact Howard A. Matalon, Esq. at 908-964-2424.

The Supreme Court of New Jersey held that individuals have a reasonable expectation of privacy in their cell phone location data under the NJ state constitution and that “cell-phone location information, which users must provide to receive service, can reveal a great deal of personal information about an individual.”

In a turn that is becoming less and less surprising given the trailblazing nature of the New Jersey Supreme Court, the Court recently ruled in State v. Thomas W. Earls that police must obtain search warrants before obtaining the personal tracking information for alleged perpetrators from cell phone providers.  While this ruling has obvious implications for law enforcement professionals, from a broader perspective, the decision impacts — and, most importantly, protects — the privacy of individuals (and related businesses) who conduct business and their personal lives on cell phones throughout the nation.  The decision underscores a continuing battle between government intrusion into personal privacy which is increasingly in tension with the advancement of the digital age vis a vis the use of smartphones to conduct day-to-day business.  While various states throughout the country have been toying with the idea of passing legislation which would require probable cause warrants to issue before access to cell phone data is granted, the New Jersey Supreme Court’s ruling puts New Jersey at the forefront of addressing this issue.

While the facts of the case are not specifically relevant and pale in impact when compared to the implications of the decision, for completeness, the case involved burglaries in Middletown, New Jersey.  In investigating the burglaries, law enforcement officials used the data received from T-Mobile to track the stolen merchandise including a cellular phone which ultimately led to arrests of Mr. Earls.  In protecting the rights of Mr. Earls and overturning the decision of the lower courts, the New Jersey Supreme Court matter-of-factly ruled that individuals can and should “reasonably expect that their personal information will remain private” when entering into a contract with a cell phone carrier.  In explicitly recognizing a Constitutionally-based right to privacy as to the location of his or her cell phone, this decision builds on last year’s ruling by the United States Supreme Court in United States v. Jones, 615 F.3d 544 (2012).  In that case the United States Supreme Court said that the State’s/Government’s attachment of a GPS device to a vehicle and the use of that device and data to monitor a vehicle’s movements constitutes a search under the Fourth Amendment and, as such, is protected under the laws related thereto.

Given the capabilities of cell phones, the New Jersey Supreme Court declared that, in essence, a cell phone was a GPS device.  In fact, the Court went as far as to say that using a cell phone for locational purposes can “be far more revealing than  acquiring toll billing, bank, or Internet subscriber records. It is akin to using a tracking device and can function as a substitute for 24/7 surveillance without police having to confront the limits of their resources”  Interestingly enough, the Court’s decision also raises the possible impact of use of the data on access to PHI (protected health information).  The suggestion is that that cell phone tracking could theoretically be used to determine when and who a patient is treating with given that the location of a medical facility is easily discernible.

This is only the tip of the iceberg.  While the Court does a reasonable job at spinning out possible scenarios where the privacy of the cell phone owner could be impacted due to intrusions on privacy without a warrant, the Court speaks in a targeted and hypothetical manner.  Though the Court attempts to temper things legally by placing an “emergency aid” exception to the use of a warrant and ultimately the fruits of the search, the possibility of mining this data should be recognized by individuals who continue to use cell phones for every aspect of their daily lives.  As cell phone (and data) use naturally increases, it will be crucial to provide tight restrictions on third-party use of cell phone information because not only will companies likely try to monetize the same, in using data in any unauthorized way, the rights and interests of privacy as a whole come into play.

OlenderFeldman LLP has significant experience dealing with privacy and business related issues which are implicated in the decision discussed above.  If you have any questions about the legal or practical implications of this case, please contact Christian Jensen, Esq. (cjensen@olenderfeldman.com) at (908) 964-2485.

OlenderFeldman’s own Aaron Messing was interviewed by U.S. News and World Report about when to give out your social security number and how to protect it, so that you can protect your privacy.

Most people get requests for their social security number on a regular basis, and it is often difficult to understand whether you are required to give that information or when it’s purely optional. In a recent U.S. News and World Report article, Aaron Messing provided some tips about determining when that information is required:

“It’s hard to tell whether a business is going to follow best practices,” says Aaron Messing, an information privacy attorney at OlenderFeldman LLP in New Jersey. “The best way to protect private information including Social Security numbers is to limit who has access to it.”

In addition to asking why your social security number is necessary and how it will be used, Aaron recommends offering an alternate identifier, such as a driver license number, being skeptical of emails and incoming phone calls and not oversharing online:

Don’t over-share online. Until 2011, the Social Security Administration assigned Social Security numbers in a predictable way. “If you share your birthday, age and place of birth, for example, on Facebook, studies have shown that Social Security numbers can be predicted based on publicly available information,” Messing says. “The Social Security Administration started randomly assigning Social Security numbers in June 2011 for that reason.” He recommends never publicly sharing your year of birth and choosing a different year when asked for online forms. “Add or subtract some years, as long as it’s a number you’ll remember,” he says.

 Read the whole article here. Aaron was previously quoted regarding privacy and protection of social security numbers for State Farm’s Good Neighbor magazine.

Affordable Care Act (ACA or "Obamacare") Legal Questions

In response to questions from concerned business owners, we’ve compiled answers to some of the frequently asked legal questions regarding complying with the Affordable Care Act, or “Obamacare”.

The Affordable Care Act: FAQ For Business Owners

Many businesses are still unaware that they must assess this year whether they are required under the Patient Protection and Affordable Care Act (“ACA”) — otherwise commonly referred to as “Obamacare” — to provide affordable healthcare to their Full Time employees when the health care plan mandate goes into effect on January 1, 2014.

Because of the complex nature of the ACA’s provisions and their nationwide impact, we have prepared this FAQ Sheet to explain in basic terms how the ACA works and to address the most common misunderstandings about the law itself by the business community. Remember: simple mistakes can often be costly to fix.

1. Do the ACA’s Health Care Plan Requirements apply to every business?   No. The ACA only applies to businesses having “Large Employer Status”, which is defined under the ACA as having 50 or more Full Time or Full Time Equivalent (“FTE”) employees.  

A Full Time employee under the ACA is someone who works an average of 30 hours per week (or 130 hours per month) as measured over a period of six (6) consecutive months in the 2013 calendar year.  Hours include both time worked and time paid but not worked (such as holidays, paid time off, and so forth).  But this is not the end of the assessment process because FTE employees also must be taken into account.

To protect against businesses trying to get around the 50 Full Time employee threshold by simply reducing the hours of a few employees below 30 hours per week, the ACA requires that an employer add together the total number of Full Time employees and FTEs for purposes of evaluating “Large Employer Status”.  The number of FTEs is determined by combining the number of hours of service in a given month for all employees averaging less than 30 hours of service per week and dividing that number by 120.  That calculation will yield the number of FTEs that must be added to the total number of Full Time employees to determine whether an employer meets the “Larger Employer Status” threshold.

Example: Business X has 42 Full Time employees and 20 employees who each work on average 80 hours per month.  Using the calculation set forth above, those 20 employees would translate into 13 FTEs  (20 x 80/120).  The total of Full Time employees and FTEs at Business X would therefore be 55 and trigger “Large Employer Status.”  Business X must therefore provide an ACA-compliant health care plan for its Full Time employees in 2014.

2. If a business qualifies as a “Large Employer” under the ACA, does it need to provide healthcare plans for all company employees?  No.

Businesses that are required to have an ACA-compliant plan only need to provide health care benefits to Full Time employees (i.e., those working 30 hours or more per week). 

3. What does a business need to include in its health care plan to become “ACA-compliant”? ACA-compliant Plans must: (A) be “Affordable”; (B) Provide “Essential Benefits”; and (C) Cover 60% of the Plan Cost (otherwise known as “Minimum Value”). 

The Affordability Test.

In order to meet ACA’s definition of an “Affordable” health care plan, the lowest cost option for a Full Time employee’s individual coverage must be less than 9.5% of the employee’s modified adjusted gross household income.  Businesses can evaluate whether they satisfy the 9.5% threshold of an individual employee’s AGI by looking to Box 1 of an employee’s Form W-2 Wages.

Example: Employee X has W-2 Wages of $30,000.  The health care plan requires the employee to contribute $200 per month for individual coverage (or $2,400 per year).  The coverage would therefore meet ACA’s definition of Affordable.  If the plan were to require the employee to contribute $250 per month (or $3,000 per year) it would exceed the 9.5% threshold and therefore the plan would not satisfy the affordability standard.

The “Essential Benefits” Requirements.

An ACA-compliant Plan must also contain “Essential Benefits” unless the plan is grandfathered under the ACA (and most existing plans do not qualify for grandfathered status for reasons not addressed here – consult your healthcare consultant or provider for details).

Such Essential Benefits must include at a minimum:

  • Ambulatory patient services, such as doctor’s visits and outpatient services;
  • Emergency services;
  • Hospitalization;
  • Maternity and newborn care;
  • Mental health and substance use disorder services, including behavioral health treatment;
  • Prescription drugs;
  • Rehabilitative and habilitative services and devices;
  • Laboratory services;
  • Preventive and wellness services and chronic disease management; and
  • Pediatric services, including oral and vision care.

 

In addition, an Essential Benefits small group Plan is subject to annual deductible limits ($2,000 for self coverage and $4,000 for family) and all plans are subject to annual out-of-pocket maximums for Essential Benefits.  For 2014, the out-of-pocket maximums are $6,350 for individual coverage and $12,700 for family coverage.

The “Minimum Value” Test

“Minimum Value” under the ACA means that the employer’s share of its sponsored plan is at least 60% of the total cost of the plan.

Both the CMS.gov and IRS.gov websites have a Minimum Value Calculator that can be downloaded as an Excel Spreadsheet and used by the employer to determine whether its sponsored Plan meets the Minimum Value requirements.  This calculation can easily be handled by health care benefits consultants, who will be able to recommend approaches to health care plans to insure minimum value is achieved.

4. Do businesses have any obligation to notify employees of their rights under the ACA regardless of whether or not they are providing an ACA-compliant Plan in 2014?  Yes.

On or before October 1, 2013, all businesses that would otherwise be subject to the Fair Labor Standards Act (which includes any business in the United States with annual dollar volume of sales or receipts in the amount of $500,000 or more) must provide ACA notification advising employees of their rights and whether the employer will be providing an ACA-compliant plan. 

This notice is known as a “Marketplace Exchange Notice,” which relates to the fact that individuals can obtain health care subsidies or purchase health care through State Marketplace Exchanges; such exchanges are expected to go into effect later this year if such insurance is not offered through an employer.  Sample notice links from the Department of Labor are attached here (employers who offer a health plan) and here (employers who do not offer a health plan).

5. Does the ACA make any changes to COBRA that businesses must comply with?   Yes.

The ACA also requires businesses to notify any employees eligible to receive COBRA benefits that they are entitled to elect coverage under the Marketplace Exchange rather than COBRA.  

A link to the DOL website page regarding new sample COBRA notification forms is available here.

6. What exposure do businesses have if they are required to provide an ACA-compliant health care plan and fail to do so?  The penalties for non-compliance under the ACA range from $2,000 to $3,000 per Full Time employee for each year of non-compliance, with the amount of the fine dependent on the nature of the employer’s failure to comply with the law.

If a business fails to offer Full Time employees a healthcare plan, the ACA penalty is $2,000 per Full Time employee (after the first 30 Full Time employees) for any employee that would otherwise be eligible to receive coverage under an ACA-compliant plan from their employer.

If a business offers a plan to all Full Time employees, but the plan is not ACA-compliant, the business may be fined $3,000 for each Full Time employee that seeks health care coverage through a healthcare exchange rather than through the employer sponsored plan.

It is also important to note that because the Internal Revenue Service will be policing ACA compliance, an employer who fails to comply with ACA may expose itself to other federal investigations into employee matters, including a full IRS or Department of Labor audit.

In conclusion, every business MUST carefully consider as part of its planning whether it is subject to the ACA and take steps this year to come into compliance if necessary.  OlenderFeldman LLP is available to assist you in this regard and to make recommendations on health care consultants as well to develop and structure an ACA-compliant plan.  Please contact Howard Matalon, OF’s Employment Partner, for an evaluation of your ACA compliance requirements by email or by using our contact us form.

Support may be growing for allowing cybertheft victims to “hack back.” What are the privacy concerns of allowing hackbacks?

OlenderFeldman’s own Rick Colosimo wrote an interesting post regarding a WSJ article describing the idea of hacking victims “hacking back” on his personal blog. He writes:

The concept isn’t crazy (the article’s warning that hacking back at the Chinese Army might be trouble notwithstanding) — there is a general common law right to self-defense (you don’t have to let someone hit you), to defense of property (you don’t have to let someone steal your stuff), to defense of others (you can stop someone snatching another’s purse), and to peaceably reclaim property (you can walk down the block and take your bike back off the front lawn of the kid who took it). The rub with hacking back is that it is made illegal by the same law that makes the hacking illegal — that is, hacking, without regard to the underlying crime of theft of property or IP, is itself illegal. Half the point is that it gives prosecutors a way to get around the idea of whether copying data is crime and to cut off snooping before it turns into a more destructive hack.

 Later, discussing Professor Orin Kerr’s statment that “because it is so easy to disguise cyberattacks, there is a real risk that retaliatory measures could affect innocent bystanders, which raises a range of privacy concerns,” Rick writes:

If the person that is hacked back isn’t the actual hacker, then their information is exposed through no fault of their own and the original victim has now compounded the damage. That’s an actual concern, not some vague notion that is readily dismissed. It’s got a nice real-world parallel: if someone steals your bike, and you go to take it back but take the bike from someone who owns the same one and didn’t steal yours, that’s bad. We all understand that. Imagine: allowing people to reclaim property creates a range of ownership concerns.

 You can read the whole post here.

New Jersey Business Lawyers | OlenderFeldman LLPNew Jersey’s Revised Uniform Limited Liability Company Act – What all owners of New Jersey LLCs Need to Know

 

 

What is the New Jersey’s Revised Uniform Limited Liability Company Act? 

The Revised Uniform Limited Liability Company Act (“RULLCA”) replaces and expands New Jersey’s Uniform Limited Liability Company Act (“NJ ULLCA”) which was originally put in place to govern limited liability companies in January of 1994. RULLCA was officially enacted on March 18, 2013, and, at least for the next 11 months, applies only to LLCs formed after that date.   After March 1, 2014, the RULLCA will apply to all LLCs regardless of the date of formation.

How will the RULLCA affect your LLC?

The following is a brief summary of the most significant changes to the statute that may affect your LLC:

1. Fiduciary Duties

 Under the outgoing NJ ULLCA, LLC members owe fiduciary duties to other members.  (These are generally the duty of loyalty and the duty of care.) The duty of loyalty often involves avoiding conflicts of interest, however, the members could waive the fiduciary duty in the operating agreement. This framework allows many people to participate in multiple businesses outside an LLC even when those other activities might conflict with the LLC’s business.

RULLCA no longer permits the members to agree to waive certain rights, including fiduciary and other rights that they owe to each other, like the duty of good faith and fair dealing.  While this may not have significant impact on the operation of a company in the ordinary course, in disputes between members involving activities outside of the company, this can have a dramatic effect and provides an aggrieved member with significantly improved rights.

2. Distributions

Under the RULLCA, the default rule on distributions is that all profit available for distribution will be made to the members on a ‘per capita” distribution, meaning equal shares for each member, unless otherwise agreed to in the operating agreement. This change means that any LLCs that do not have an operating agreement and that have been distributing profit other than on an “equal share” basis, will be required to do so.

3. Disassociation

Under the NJ ULLCA, upon disassociation a member, absent a contrary provision in the operating agreement, is entitled to be paid the fair value of his or her interest in the company, which can be a financial stress on a business that might prefer to deploy its capital for growth. Under the RUCLLA, a “resigning” member is no longer automatically entitled to receive fair value; instead that person becomes dissociated as a member and assumes the rights of economic interest holder.  This change means that the member loses the right to participate in the governance of the company (as well as the potential liability associated with the operation of the company), but retains the rights to receive distributions of profit and of the company’s assets upon liquidation or dissolution.  Absent a provision in the operating agreement that requires the sale of the member’s interest upon disassociation, a member will neither be entitled to be bought out nor will the company have the right (or obligation) to do so (note that this can have the effect of enabling a member to cease participating in the business while continuing to profit from it, an outcome typically not desired by the remaining members).

4. Deadlock and Oppression

Under the NJ ULLCA, there are very few rights afforded to a minority member that is oppressed by the majority or, similarly, to resolve a deadlock between members.  As such, this issue is typically addressed in the operating agreement to ensure that the members have remedies in the event of oppression or deadlock.  The RULLCA provides express remedies for oppressed minority members: the right to seek the dissolution of the LLC or the appointment of a custodian.  These remedies give the oppressed minority substantial leverage to obtain a buyout or other relief relating to the operation of the company that it previously did not expressly have under the NJ ULLCA.

Conclusion

While it is good practice to have your LLC operating agreement reviewed every few years to ensure that it is consistent with the intentions and practices of the members, the changes effectuated by the RULLCA make it critical that every company’s operating agreement be updated to make sure that it consistent with the revisions to the law.

OlenderFeldman LLP

New Law Significantly Limits Viability of Certain Shareholder Derivative Suits in New Jersey

On April 2nd, New Jersey Governor Chris Christie signed bill A-3123 into law and in doing so, significantly revised the law in New Jersey regarding shareholder derivative proceedings under N.J.S.A. §14A:3-6, etseq. The stated purpose of the new law is to temper derivative lawsuits brought by shareholders against a corporation, its directors or majority shareholders and to make efforts to curb excessive and unnecessary litigation costs on New Jersey corporations.  Beyond this succinct goal, an ancillary intent of the law is to encourage corporations to continue to incorporate in New Jersey by making the state more corporate friendly.

Notable changes  include the following:

As a precondition to suit, a shareholder must make a written demand to the corporation to take suitable corrective action and allow the corporation 90 days to investigate and respond to the demand unless “irreparable injury to the corporation would result by waiting.”  This 90 day waiting period is a akin to a tort claims notice and is intended to give corporations adequate time to remedy potentially minor issues before dealing with the costs and expense of litigation.

In the event that a plaintiff challenges a company’s actions in suit after the demands made in the 90 day letter are rejected, he/she/it must allege with particularity that the decision was improper and show any rejection was in bad faith or not made by “independent directors.”   A status as a litigant does not divest a director of independence and unless the independence of the directors is challenged successfully, the plaintiff must show bad faith on the part of the entity.

The law increases the interest requirement that a plaintiff must hold an entity to avoid the posting of security against the possible award of attorney’s fees and costs. If litigant a holds less than 5% of the outstanding shares of any class or series of the corporation, unless the shares have a market value in excess of $250,000, the corporation can require the plaintiff to give security for the reasonable expenses, including attorney’s fees.  This will hopefully dissuade minority shareholders from filing suits with questionable merit.

The law requires that a plaintiff remain a shareholder throughout any initiated litigation so that it can adequately and fairly represent the corporation’s interests.  Prior to this change, the shareholder merely had to be a shareholder at the time suit was filed.

The law applies to both derivative proceedings brought on behalf of single shareholders as well as class actions.

A corporation can move for dismissal of a suit, after a good faith investigation, and assert that the derivative proceeding is not in the best interest of the corporation on the grounds that its board is independent and acted in good faith.  Such a motion will be granted unless the court finds otherwise or the shareholders rebut the corporation’s supporting facts.

The court must stay discovery until ruling on the motion to dismiss, but can order limited discovery if the plaintiff shows a lack of independence or good faith.

The court must approve any settlement or dismissal.

The court can award expenses to the plaintiff if the proceedings result in a substantial benefit to the corporation, or to the defendant if the case was commenced or maintained without reasonable diligence or reasonable cause or for an improper purpose.

For these new provisions to apply, existing corporations must amend their certificate of incorporation and explicitly adopt these provisions.

For more information about this new law and how it may impact your business please contact Olender Feldman LLP, or review our additional  business legal resources here.

 

The consequences of failing to develop employment-hiring materials can be devastating. So why do many employers fail to develop a basic set of documents governing the employment relationship with new hires?

Howard Matalon notes that although employment documents can be developed in a very cost-effective manner, many employers fail to give consideration to such documents until it is too late.  and no employer can afford to build a business without them. “Employers must reprioritize the importance of employment hiring practices and make them an actual part of their business model,” says Matalon.   Compliance as an afterthought has become an extremely expensive prospect for the unfortunate employers who ignore their human resource obligations.”

For these reasons, all employers must take a methodical approach to their hiring practices and procedures and treat these processes as seriously as they would every other critical aspect of their business. Read the full article regarding employment hiring practices.

In this age of social media and ubiquitous photography, what are your rights as a photographer? What privacy laws do you need to be concerned with?

OlenderFeldman LLP’s Aaron Messing was interviewed by Dave Johnson of Techhive.com about the rights and obligations of photographers, especially concerning privacy:

First, the good news: Most people, most of the time, can simply take pictures and not worry about what is legal and what isn’t. As a general rule, you can use a camera to take photos in public—on streets, on sidewalks, and in public parks—without restriction. As Aaron Messing, an attorney at OlenderFeldman LLP, puts it, “What can be seen from public can be photographed.”

[However,] [e]ven in the United States, Messing notes, photography can be prohibited around military locations and sensitive energy installations. And it gets more complicated from there. Remember that you can’t shoot on private property with the same impunity as in public. And sometimes it’s not easy to tell.

Read the whole article over at Techhive.

What is the best way to protect against employee lawsuits?

We recently received an inquiry about the best ways for businesses to protect against employee lawsuits. We’ve found that most employee lawsuits occur due to low morale, unaddressed personality conflicts, disparate productivity between employees and/or failure to give effective performance reviews. Of course, it is always important to have effective, well-drafted legal documents and policies that clearly delineate employee rights and obligations from the outset, which will help your business win lawsuits . However, the easiest way to protect your business from lawsuits is by preventing them in the first place. This means ensuring a good working environment, keeping employees happy, and giving employees recourse to deal with the issues that come up in the workplace, ideally through a dedicated and effective HR representative.

OlenderFeldman LLP Data Protection and Privacy lawyers Michael Feldman and Aaron Messing will attend the International Association of Privacy Professionals (IAPP) Global Privacy Summit, to be held March 6-8 in Washington, D.C.

The event will feature thousands of privacy industry professionals participating in dozens of educational sessions. If you would like to meetup with Michael or Aaron, please send them an email or contact us using the contact form. We hope to see you there.