Many people thinking or reading about startups and crowdfunding come across the phrase “accredited investors,” but it’s not always explained. The Securities Act of 1933 regulated public offerings after the 1929 stock market crash scared, well, everyone. However, the definition of accredited investor appears in Rule 501 of Reg D originally adopted in 1982. It provides a safe harbor exemption from registration. “Safe harbor” means that if an offering complies with the specified requirements in a rule, the SEC deems it to not be a public offering and exempt from registration. Registration, briefly, means the filing of a vast amount of information with the SEC that has to be provided to prospective investors. It must include all information required by the SEC and any information needed to make the materials not misleading. This is essentially “going public” and is an expensive and time-consuming process. Rick Colosimo

Starting next year, there will be new and stringent data protection laws in place in the European Union (“EU”) and the European Economic Area (“EEA”) – laws which may have a material impact on business located in the United States. Effective as of May 25, 2018, the new General Data Protection Regulation (“GDPR”) will apply to processing of personal data relating to individuals who are in the EU/EEA and in connection with activities in the EU/EEA, or in connection with monitoring behavior in the EU/EEA. The GDPR states that it applies to “natural persons, whatever their nationality or place of residence, in relation to the processing of their personal data.” The GDPR applies to controllers (the entity who determines the purposes and means for processing the personal data) and processors (the entity who performs any operations on the personal data, including storage or structuring of the data). Thus, if you or your business are a controller or processor in connection with the personal data of any EU/EEA subjects, you will now be subject to the GDPR even if you are not located in the EU/EEA and do not physically conduct any business there. The GDPR requires those to whom it applies to maintain records of its processing activities and to be in a position to reveal how they comply with the data protection requirements and that they have appropriate procedures in place. The GDPR further requires entities to inform data subjects of its identity, how the personal information will be used, the lawful basis for processing the data, the data retention periods, and of the right to complain to the applicable Information Commissioner’s Office (“ICO”). All of this information must be provided in clear, concise and easy to understand language. The GDPR provides individuals with the following rights with respect to their personal data being collected and deleted: The right to be informed of what data is being collected and why; The right to access their personal data; The right to have any incorrect information fixed; The right to have their personal data deleted; The right to restrict processing; The right of data portability; The right to object to the use of their personal data; and The right to not be subject to automated decision-making with respect to their data. The GDPR has strengthened the requirement that there be a lawful basis for processing personal data (of which there are 6 justifications for regular personal data and 10 justifications for special categories of data) and data subjects must also now be informed of the lawful basis for the processing – often accomplished through a privacy notice. The GDPR has updated and strengthened the consent requirements. Consent must be “freely given, specific, informed and unambiguous” and be given “by a statement or by a clear affirmative action . . . .” At OlenderFeldman, we have created a consent checklist for clients to follow to assure consent is adequately provided. While such a checklist is not required for legal compliance, it makes the process easier and more certain. The GDPR also imposes new reporting requirements to the ICO (and possibly other governmental bodies depending on the type of breach and where it occurs and what information is breached), and under some circumstances, to the data subject, when an entity suffers a data breach. Finally, the GDPR requires controllers and processors to implement appropriate technical and organizational measures proportionate to the risk. If you have any questions about the GDPR, its applicability to you or your business, or seek additional details concerning any data privacy and protection matters related to your business, please contact Michael J. Feldman, Esq., CIPP[1]. [1] Certified Information Privacy Professional of the International Association of Privacy Professionals.

While many businesses believe that they have adequate procedures in place to protect their own confidential information or that of their clients/customers, most do not. Rather, they merely have a section in their employee handbook on confidentiality, and maybe require their employees to sign confidentiality or non-disclosure agreements. Generally, such provisions are not sufficient to protect a company’s confidential and proprietary information, nor to effectively minimize the chances of a data breach. Indeed, even with such procedures in place, there is little contained in such documents which actually address how to preserve and protect such confidential information from inadvertent or malicious disclosure. Further, even if the business has some of these procedures in place, without a proper policy and training, compliance is less likely. This is where an Information Security (or “InfoSec”) Policy comes into play. The purpose of this article is to outline some of the major issues which are addressed in an InfoSec Policy – most or all of which will help protect the company and its assets. Obviously, the actual practices and procedures of each business, together with applicable legal and contractual obligations of the business, will impact how each of these issues is addressed, as well as determine whether there are additional matters which must also be contained in the InfoSec Policy. This article is not legal advice and is not intended to issue any legal opinion, nor determine whether or not any specific business requires an InfoSec Policy. Rather, it is intended to start that discussion and explain the types of issues which can, and typically should, be addressed. Purposes and Areas Addressed by an InfoSec Policy The purpose of an InfoSec Policy is to outline the company’s position on corporate information security and establish general rules for its personnel to follow, which will ensure the confidentiality, integrity, and availability of information and protect the company’s own information technology assets from unauthorized access, use and/or modification and damage or destruction. The InfoSec Policy generally applies to all personnel providing services for or on behalf of the company, whether full-time or part-time, contractors/sub-contractors, interns, or temporary personnel. The InfoSec Policy establishes certain roles and responsibilities for information security within the company, as well as a framework with which those individuals can perform these obligations. InfoSec Policies typically address computer systems, network operations, and company information, as well as the individuals who work with or have access to same. The concept is to create standard operating procedures to address information security requirements related to: General security controls. Computer acceptable use. Passwords. Internet use. E-mail/instant messaging. Virus and other infection prevention. Communication devices. Remote network access. Wireless networking. Information protection. Physical access security. Addressing security incidents. Policy maintenance. Implementation of an InfoSec Policy An InfoSec Policy must be more than a resource for employees, contractors, etc., to access and review when they have questions. It must also be understood by the company and its workers so its policies can be implemented and followed on a daily basis. Therefore, once an InfoSec Policy is prepared and finalized, we typically provide an initial training session for company employees and all those to whom the Policy applies. Thereafter, training should be conducted at least once a year to assure the InfoSec Policy and all those who must comply are current, and that the information contained therein is understood and followed. The follow-up training can be conducted by us, or we can teach someone from the company to conduct the training, including providing any updated information or changes in policy/law. While the InfoSec Policy is a written document, it must also be a fluid document which is updated and adapted as new policies and procedures evolve. Getting Started The first step in the development of an InfoSec Policy is to determine what information a company has, what a company’s clients/customers/vendors expect of it with respect to information and security, what laws apply, and what policies and procedures the company currently has in place. After understanding and documenting this information, the information must all be assimilated into a draft – and ultimately a final – written InfoSec Policy. Thereafter, the InfoSec Policy must implemented, applied and updated as needed. For more information or if you have any questions, please contact Michael J. Feldman, Esq., CIPP[1] at mfeldman@olenderfeldman.com or 908-964-2486. [1] Certified Information Privacy Professional from the International Association of Privacy Professionals.

There was a time when law firms could rely on their well-trained staff to file pleadings with courts simply by affixing a stamp and sealing an envelope. That time has passed. Mandatory “e-filing” for law firms has ushered in a new era where point and click dominate. To those seasoned practitioners who spent their early years Shepardizing by hand, it is a brave new world. Unfortunately, this technology is not a panacea that cures all ills. New York courts at both the state and federal level have implemented mandatory electronic filing (“e-filing”) systems. As a result, it is vital for attorneys and their staff to ensure that they are competent with the state and federal e-filing systems to avoid missed deadlines. In the alternative, firms can retain a third-party e-filing specialist to ensure their e-filing is done timely and properly. In New York, the Eastern and Southern federal district courts have utilized the federal e-filing system (“ECF”) for almost twenty (20) years. At the state level, the New York State Courts Electronic Filing System (“NYSCEF”) went live in 2013 for Supreme Court cases and was expanded to the appellate courts (including the Court of Appeals) on March 1, 2018. According to the court system, e-filing systems should make it easier for attorneys to (1) file and serve papers, (2) initiate suit, (3) obtain filed copies of pleadings, (4) manage case files, (5) reduce courier costs, and (6) help the environment by avoiding the production of printed copies for filing. The ease of e-filing, however, is subjective as the “drop-down” menus and online terminology can frustrate even the most skilled practitioner. The anxieties and stresses of e-filing are easily identified. First, attorneys, who write briefs and not binary code for a living, must learn how to use the e-filing systems. Such training may include converting documents to .pdf files, modifying file sizes, and marking redactions. Furthermore, both NYSCEF and ECF have their own e-filing rules and requirements. Perhaps worst of all, in the nightmare scenario of a system-wide technical failure that coincides with a filing deadline, a lawyer is at the mercy of the Court’s determination that the system “could not be accessed continuously or intermittently over the course of any period of greater than one hour after noon of that day.” In this event, an attorney must scramble to serve a hard copy of any pleading via courier and quickly draft an affirmation explaining the failure to electronically file by the close of business. (NYCRR 202.5-b(d)[1][i]). Recent judicial opinions illustrate courts’ intolerance of an attorney’s failure to properly e-file documents and have cited these failures as bases for denying motions. Recently, the Supreme Court of New York - New York County denied a motion for summary judgment, chiefly, because the movant’s attorney failed to electronically file all exhibits cited in its pleading. (Arnoff v Irving Grunberg, Wolf Grunberg Corp, 2018 NYMisc LEXIS 173 [Sup Ct New York Cty January 18, 2018]). Compounding the problem, counsel further failed to provide a complete e-filing of the exhibits within three days as required by rule. (NYCRR 202.5-b(d)[1][i]). Local federal district courts have likewise been intolerant of counsel’s failure to properly and timely e-file documents. For example, in Graves v. Deutsche Bank Sec., Inc., the district court denied a motion to disqualify counsel because the moving party filed its motion only several minutes past a court-imposed deadline. Although the filing party sought to excuse the late filing due to a computer malfunction, the court refused to grant relief. (See Graves v. Deutsche Bank Sec., Inc., 2011 US Dist LEXIS 27336, at *9 [S.D.N.Y. Mar. 4, 2011]). The challenges of learning how to e-file property pale in comparison to the implicit warnings of Arnoff and Graves. An improperly e-filed document or an untimely technical failure may negatively impact clients and attorneys alike. While attorneys and support staff should familiarize themselves with the state and federal e-filing systems, there is a growing industry of vendors who specialize in e-filing services – including in New York. To this end, OlenderFeldman LLP recently completed an initial capital raise for its client, eFileFAST, which provides a technology solution that mitigates the risks involved with e-filing by checking the documents and ensuring their proper submission. Attorneys that do not have the time, patience, nor technical expertise for the requisite e-filing education can avail themselves of the services of such third-party e-filing specialists. With every state and federal court in New York requiring all pleadings be e-filed, attorneys need to adapt and evolve to avoid e-filing mistakes. By familiarizing themselves with the e-filing process, retaining a third-party e-filing specialist or using an e-filing software solution, attorneys can safeguard against e-filing failures, and redirect their efforts to the actual practice of law. Sean Rose, Esq., focuses on litigation matters, representing corporations and businesses of all sizes in complex commercial disputes in state and federal courts throughout New Jersey and New York. Sean’s practice includes shareholder, member, and partnership disputes; disputes concerning restrictive covenants (including non-competition, non-solicitation, and confidentiality/trade secret provisions); and construction claims. 908-964-2460 srose@olenderfeldman.com

We are often asked to provide an explanation as to the different types of non-cash compensation that are traditionally granted to employees of a company. The following provides a high level summary. OUTRIGHT EQUITY GRANT Ownership: Outright ownership fully vested as of the date of grant. Can be subject to claw back (i.e., repurchase) by the company pursuant to the terms of the Operating Agreement. Voting: Has full voting rights. Allocated Share of Profit/Loss: Pro rata right to share in the profit and loss of the company based upon percentage ownership. Underlying Enterprise Value: Has all underlying enterprise value from inception. Tax Treatment: Taxed to recipient as ordinary income upon date of grant based upon fair market value. Disposition after twelve (12) months will be taxed at capital gains rates. RESTRICTED EQUITY GRANT Ownership: Vested as of date of grant but subject to a risk of forfeiture (i.e., vesting based upon time and/or performance conditions). Voting: Can have full voting rights. Allocated Share of Profit/Loss: Can have right to share in the profit and loss of the company based upon pro rate ownership. Underlying Enterprise Value: Will have full enterprise value attributable to it, subject to certain tax limitations set forth below. Tax Treatment: Within thirty (30) days of grant, recipient to file Section 83B election which will allow recipient to report the value of the grant at a discount of fair market value due to risk of forfeiture. Tax will still be due on the discounted fair market value which will be treated as ordinary income. Provided the equity is held for at least twelve (12) months, tax treatment on disposition will be capital gains. PROFITS ONLY INTEREST. Ownership: Immediate ownership upon grant. Voting: Full voting rights. Allocated Share of Profit/Loss: Has right to receive allocated percentage of profit that is earned after the date of grant. No right to any retained earnings or profit from operations prior to date of grant or to allocation of losses arising from operations prior to date of grant. Underlying Enterprise Value: Has no underlying enterprise value. (i.e., as of the date of grant has zero value). Accumulates pro rata percentage of enterprise value that is created after the date of grant. Tax Treatment: No taxable income to recipient as of date of grant. Equity held for at least twelve (12) months from date of grant will be taxed at capital gains rates upon disposition. PHANTOM EQUITY Ownership: No ownership in the equity of the company. Solely a contract right to receive a transaction bonus upon liquidation of the company. Must be employed by the company at the time of liquidation to receive the transaction bonus. Voting: No voting rights. Allocated Share of Profit/Loss: No right to participate in profit and loss. Underlying Enterprise Value: Has full underlying enterprise value upon grant. Tax Treatment: Taxed as ordinary income as it is treated as a transaction bonus at the time company is sold. OPTION GRANT Ownership: No ownership as of date of grant. Ownership upon exercise of the option. Voting: No voting rights until the option is exercised. Allocated Share of Profit/Loss: No right to share in profit and loss until the option has been exercised. Underline Enterprise Value: Option is granted at fair market value which requires the recipient to pay an exercise price to acquire the underlying equity. Since the option has a fair market value strike price, as of the date of grant it has no participation in the underlying enterprise value. Tax Treatment: No tax incurred on date of grant. Upon exercise, ordinary income will be recognized at the difference between the then current fair market value and the strike price. If option is exercised at least twelve (12) months prior to a liquidation event, disposition of the equity will result in capital gains treatment.

On July 1, 2018, the Diane B. Allen New Jersey Equal Pay Act will go into effect. If you have employees, you need to know about this important new law and what it might mean for you and your business. For more information please read Lauren Paxton's Article: Equal Pay Act - Just the FAQs For additional information, please contact Lauren at lpaxton@olenderfeldman.com or 908-964-2453. Lauren works closely with Howard Matalon, a partner at the Firm, who specializes in employment law. Howard is also available to discuss concerns about this new law or other employment matters. Please contact him at: 908-964-2424 or hmatalon@olenderfeldman.com

News of protests among the 33,000 Toys R Us employees impacted by the retail giant’s bankruptcy grabbed headlines last week. The Wayne, New Jersey-based institution announced the immediate closure of nearly 200 stores upon filing for bankruptcy last fall, and liquidation sales at the remaining 700+ stores are well underway. Employees are outraged by their lack of severance pay, particularly when the executives received millions in retention bonuses on the eve of the bankruptcy filing, and the bankruptcy court approved an additional bonus plan during the proceedings.Why the disparate treatment of employees and executives? It’s complicated.Payment of employee and executive compensation in bankruptcy proceedings is the product of a web of applicable bankruptcy and non-bankruptcy state and federal laws. Within bankruptcy law alone, there are no less than nine (9) different classifications of claims, broadly falling within three general categories: (1) administrative, (2) priority, and (3) general unsecured. • Bankruptcy Claims and Priorities. The difference in priority and timing of payment to employees in the event of bankruptcy is explained, in large part, by the bankruptcy claim classification scheme. Administrative claims, as the name signifies, comprise the costs and expenses of administering the bankruptcy case, which necessarily includes the fees and expenses of the legal, financial, and other professionals charged with conducting the proceedings. Administrative status is also bestowed upon the employees that are retained to operate the business while the bankruptcy case is pending. As a result, executives and other key employees tend to move to the head of the line when the company’s assets are disbursed during the bankruptcy case. Whereas employees who are subject to layoffs and store closings, as in the Toys R Us case, are, with some exceptions, paid like other creditors, as general unsecured claims. Executive bonuses are more controversial, because they involve the discretion of the bankruptcy courts. • Non-Bankruptcy Law. Non-bankruptcy law also factors into employee compensation in bankruptcy. Employees have some protection in bankruptcy under federal and state laws, such as the U.S. Worker Adjustment and Retraining Notification (WARN) Act of 1988 (29 U.S.C. § 2101, et seq.) and in New Jersey, WARN Act (N.J.S.A. 34:21-1, et seq). These laws generally require businesses of a certain size to provide 60 days’ written notice before a mass layoff, or, upon an immediate termination, pay 60 days’ of wages and benefits. Bankruptcy courts in most jurisdictions recognize the continued applicability of the WARN Acts in bankruptcy, but to varying degrees. The nature of the bankruptcy case and the timing of a layoff may determine the priority of employees’ claim. For example, if an employee is laid-off prior to a Chapter 11 bankruptcy filing, the courts will generally permit the employee to assert a priority claim in the bankruptcy case for only a portion of the amount owed. The remaining balance will be relegated to the general unsecured class. Even then, the priority portion of the claim may not be paid, as administrative priority claims, such as claims of the retained employees and other professionals that administer the case, may exceed the funds available for distribution. If an employee continues to work for a company in a Chapter 11 reorganization, after the petition is filed, the employee’s paycheck should receive top-level administrative priority treatment. Timing is also an issue. Administrative priority claims are often paid during the course of the bankruptcy case; whereas, priority and general unsecured claims are paid, if at all, upon the conclusion of the case - either through a bankruptcy plan or in a liquidation. • Executive Compensation Executives that continue to operate the business through bankruptcy are paid on the top-priority administrative level, and may receive bonuses, subject to court approval, based on, for example, benchmarks achieved in the bankruptcy case. Bonuses in bankruptcy tend to raise controversy. The justification for executive compensation in bankruptcy is typically rooted in the need to retain the individuals who have institutional knowledge of the business. This knowledge is critical to the success of a bankruptcy case. Many businesses file for bankruptcy with plans to reorganize but end up in a liquidation scenario due to the company’s inability to propose a viable plan. By the math, a company’s successful emergence from bankruptcy, with the going concern value that will be salvaged for the enterprise and its employees, far outweighs the expense of paying key executives to steer the business through the troubled waters of bankruptcy. In addition, without bonuses, well-performing executives have a strong incentive to find work elsewhere upon a bankruptcy filing. Running a business in bankruptcy is a round-the-clock job. Executives not only operate the day-to-day of the struggling business, they are frequently required to testify in depositions and/or in court, compelled to justify their every decision, and otherwise charged with navigating the legal morass of bankruptcy proceedings. For more information, contact Lauren Paxton at lpaxton@olenderfeldman.com or 908-964-2453. Lauren is an Employment and Bankruptcy lawyer at the Firm, and former Assistant United States Attorney and bankruptcy lawyer for the United States government. She has represented a wide-range of creditors and insiders in both large and small Chapter 11 bankruptcy cases in the Bankruptcy Courts for the Southern and Eastern District of New York, the District of New Jersey, and the District of Delaware.

New Jersey regulators have signaled their intention to place independent contractor (“IC”) relationships under a magnifying glass this year. Governor Murphy recently signed an executive order establishing a Task Force on Employee Misclassification, through which representatives from the Departments of Agriculture, Economic Development, Human Services, Transportation, Treasury, and the Attorney General’s Office have been collaborating with the Department of Labor to investigate IC classification issues across the State. New Jersey also entered into a cooperation agreement last week with the U.S. Department of Labor in order to secure federal resources to assist in its efforts. The time has come for New Jersey businesses to evaluate their compliance with state law governing independent contractor relationships. IC relationships are fraught with traps for the unwary. Most business do not appreciate the practices and documentation needed to establish legally compliant IC relationships. There are easy to implement, cost effective steps that business can take to avoid undesirable outcomes when regulators come knocking. OlenderFeldman has a new HR auditing program known as HIRES which proactively troubleshoots IC issues and quickly resolves them for the benefit of your business. For additional information, please contact Lauren Paxton in our Employment Practices Group at lpaxton@olenderfeldman.com or 908-964-2453. Lauren also works with Employment Practices Partner Howard Matalon, who specializes in employment law at the Firm. Howard is available to discuss concerns about IC issues or other employment matters. Please contact him at: 908-964-2424 or hmatalon@olenderfeldman.com">hmatalon@olenderfeldman.com.

Two warnings: First, this is a complicated topic and one that is very challenging to distill into easily digestible concepts. This article is intended to be a cursory summary and not a detailed analysis of everything you need to know. Make sure to get advice from qualified professionals; Second, tax laws and the tax treatment of tokens are evolving and what might (and I mean might) be the tax outcome today may not be the tax outcome in the future. Finally, the analysis to determine the value of tokens is very fact sensitive. This article does not constitute tax advice. Most founders of companies are familiar with the concept of stock options and stock grants as a method of attracting and retaining employees. Giving employees a “stake in the game” ensures that their interests and goals are aligned with the company’s - it incentivizes and rewards performance by sharing the increasing enterprise value of the company, and engenders loyalty and reduces turnover through “golden handcuffs”. Stock options and stock grants are subject to tax rules that provide clear direction on valuation and associated tax treatment to both the corporation and the recipient. Blockchain based technology companies have an additional tool to attract and retain talent –tokens. Side note: there are plenty of articles on the Internet that use tokens and coins interchangeably, we are referring to the token as a medium of exchange for the products or services of the company issuing the token (aka utility tokens). By contrast, a coin (or cryptocurrency token) is a token exchangeable for fiat (legal currency) or other cryptocurrency, and a security token is a token that is tied to a physical asset or the equity of the issuer. This article will focus on utility tokens – tokens that are exchangeable for products or services of the issuer – and all references to tokens are intended to refer to utility tokens only. Background Tokens are considered “property” by the IRS, and are generally governed by Section 83 of the Internal Revenue Code. Tokens can be granted to employees or contractors and are treated the same for tax purposes by the Internal Revenue Service (IRS). Tokens, unlike incentive stock options or other tax-deferred forms of equity compensation, are not entitled to any deferred tax or other favorable tax treatment. In short, as of the date of grant, the recipient of a token is deemed to have received ordinary income equal to the fair market value of the token. The question, of course, is how do we figure out the fair market value of the token? Section 83(a) provides that if a person receives property in exchange for services, the fair market value of the property at the time the recipient has full rights to such property (i.e. they are not subject to a substantial risk of forfeiture), less any amount paid by such recipient for the property, is included in their gross income. In simple terms, that means that if a token has a fair market value of $1, and the employee received it for services and paid nothing for it, then the employee recognizes income of $1. Valuation Factors The process for valuing tokens generally falls into two buckets: objectively determinable value and subjectively determinable value. For purposes of this article, the valuation analysis assumes that the tokens are not trading on a public exchange. If they are, then a market approach is used - value is based on the pricing established by the trading on the exchange, and the valuation question is simple to answer. Objective Determination of Value Objectively determinable value is fairly straightforward, and relies on the following: the services or products for which the tokens are exchangeable exist at the time the tokens are issued or will exist shortly after tokens are issued; the services or products have a fair market value, either because they are priced by the issuer or because the market has established a value; the tokens have a specific exchange rate for the services or products; at any given point in time the issued and outstanding number of tokens is known; The company has not established any fixed price at which tokens are sold (pre-ICO). This becomes a simple math exercise at any given point in time: X= number of tokens required to be exchanged for the services or products;Y=fair market value of services or products;Z= price per token Y/X = $Z Note that X is dictated by the issuer and may be changed by the issuer to meet its goals for the products/services; as well, the issuer controls the number of tokens issued and similarly can largely dictate secondary market value. Since all of the above factors that dictate value are controllable by the issuer, these tokens have a readily ascertainable value. Subjective Determination of Value Subjective valuation comes into play when some or all of the factors above are unresolved, as well as others: The services or products are in development and as such, technology risk, execution risk, financing risk, and a myriad of other risks may exist that could cause the deployment of the services or products to be delayed, more costly, or never happen; Pricing for the services or products is not yet established, either because of point 1 above, or because they are new offerings for which a market value is not yet known; No fixed rate of token exchange for the products or services has been established; No decision has yet been made on the number of tokens that will be issued in any given period of time; The tokens are not priced; The tokens are subject to restrictions on transfer; The issuer does not have a readily defined plan to resolve the above. As a result, valuation will largely be dictated by management’s assessment taking into account some or all of the above. The net outcome is that the tokens are likely to have a nominal fair market value at the time of grant. Risk of Forfeiture The last component of valuation is determining whether the tokens are subject to a “substantial risk of forfeiture”. A substantial risk of forfeiture exists when the tokens are subject to vesting criteria, the failure of which results in the recipient losing the tokens. Typical vesting criteria is time based, performance based, or some combination of the two. Tokens that are subject to a substantial risk of forfeiture are not deemed by the IRS to be received by the recipient. Thus, on the date of grant, and thereafter until they vest, the recipient does not recognize any income. However, as the tokens vest, the recipient is deemed to have received income in an amount equal to the fair market value of the tokens at that time, and if the value of the tokens has increased substantially from the date of grant, the recipient can find themselves with a hefty tax bill. Thus, to mitigate the tax impact of a grant of tokens that have a substantial risk of forfeiture, the IRS permits a recipient to elect to report income as of the date of grant in an amount equal to the discounted fair market value of the tokens at that time. To make the election, the recipient must file a Form 83(b) within thirty (30) days of grant. The more onerous the vesting criteria, the greater the risk of forfeiture, and the greater the discount. Discounts can range from 10% to as high as 90%, based on the severity of the vesting criteria (by way of example, if the recipient had to stay employed with the company for 50 years to vest in their tokens, it should be obvious that the risk of forfeiture is very high, and therefore the value of the tokens should be very low). By filing Form 83(b), the recipient will pay (hopefully nominal) taxes on a current basis, but as the vesting criteria is satisfied, the recipient will not recognize any additional income and it will be deferred until the tokens are disposed of (in this case, traded, sold or used to purchase the associated services or goods). Conclusion Tokens can serve as a powerful incentive to employees and contractors and a useful tool for companies. Just make sure that the tax implications are considered and properly addressed. Kurt D. Olender is the managing partner of the Firm. For more information, contact Kurt at 908-964-2485, or kolender@olenderfeldman.com">kolender@olenderfeldman.com.

All New York State Employers. Effective October 9, 2018, all New York State employers must implement sexual harassment policies and training. Highlights from recent draft guidance issued by the State, which will be subject to public comment through September 12, 2018, are as follows: Policy Requirements (Eff. Oct. 9. 2018): Content of Policies - Sexual harassment policies must include, among other things: Examples and explanations of sexual harassment; Information regarding employee rights and procedure to file complaints; and Mandatory reporting requirements for supervisors and managers. Applicability and Availability - A fully compliant policy must be: Made applicable to all employees, as well as applicants for employment, interns, contractors and other persons who conduct business with the employer; Posted prominently in the workplace; Made available on a work computer for employees to print for their personal records during work hours; and Employers are encouraged to secure written acknowledgment of the policy by each employee. Training Requirements and Deadlines (Eff. Oct. 9, 2018; training deadline Jan. 1, 2019): Training must be interactive, with an opportunity for questions by employees; Training must cover certain topic areas; Employers must conduct fully compliant training by January 1, 2019; New employees must complete training within 30 days of hire; and Training is mandatory for all employees, even temporary or out-of-state employees who only work in New York for one day. Complaints and Investigations (Eff. Oct. 9, 2018): The State has issued a suggested form of complaint for employers to implement, Investigations of complaints should follow specific steps outlined by the State; and Investigations should be completed within 30 days. Litigation and Settlement (Already in effect, since July 11, 2018): Employees may not be compelled to arbitrate sexual harassment claims, and any term of an existing employment contract or other agreement to the contrary is null and void; Businesses are limited in seeking confidential treatment of settlements of sexual harassment claims - a settlement may only remain confidential if the employee prefers confidentiality, and such preference is made explicit and memorialized in a separate document from the principal settlement agreement, with a review and revocation period. New York City Employers. Mandates already in effect for New York City employers with 15 or more employees include: Mandatory posting of the City’s form of Notice in a prominent location, and Mandatory distribution of the City’s form of fact sheet on sexual harassment to all new hires. Effective next Spring (April 1, 2019), NYC employers with 15 or more employees must conduct sexual harassment training in accordance with further guidance from the City to follow. OlenderFeldman has a new HR auditing program known as HIRES which proactively troubleshoots legal compliance issues and quickly resolves them for the benefit of your business. For additional information, please contact Lauren Paxton in our Employment Practices Group at lpaxton@olenderfeldman.com or 908-964-2453. Lauren also works with Employment Practices Partner Howard Matalon, who specializes in employment law at the Firm. Howard is available to discuss concerns about compliance issues or other employment matters. Please contact him at: 908-964-2424 or hmatalon@olenderfeldman.comhmatalon@olenderfeldman.com">. IMPORTANT DATES FOR SEXUAL HARASSMENT PREVENTION

Years ago you would only read about a data breach once in a blue moon – it was the rare exception. Fortunately, it continues to be the rare exception, but as the world has moved to become fully digital, the frequency of significant data breaches is no longer like finding a four-leaf clover. Every business must anticipate the possibility of a data breach, more a function of the magnitude of the “when” vs. the “if”. All companies which collect personally identifiable information of consumers (financial information is considered personal information) are subject to the data breach notification rules of each state in which the persons whose data was collected reside. Under New Jersey Rev Statute Sec. 56:8-163, if you sell products or services to a person located in New Jersey and your systems (whether maintained by you or on your behalf by a third party) are compromised, then you are required to provide various notices to the affected individuals and to certain state agencies. Click here for a brief summary.

The New Jersey Paid Sick Leave Act goes into effect on October 29, 2018. The Act applies to all New Jersey Employers. It provides for mandatory sick leave to employees, including part-time, student, and seasonal workers. For more information, follow this link:Client Alert NJ Paid Sick Leave - L.Paxton. OlenderFeldman has a new HR auditing program known as HIRES which proactively troubleshoots legal compliance issues, including compliance with state and federal leave requirements. For additional information, please contact: Lauren Paxton, Counsel, Employment Practices, at lpaxton@olenderfeldman.com or 908-964-2453; or Howard Matalon, Partner, Employment Practices, at hmatalon@olenderfeldman.com or 908-964-2424.