The wave of resignations that began last year and have only dropped modestly in Q1 of 2022 remains the crux of difficult days and sleepless nights for business leaders across all industries.[1] In too many cases, the employee exodus has crippled operations, forcing companies to turn away clients and damaging relationships with long-time partners. The idea of the Great Resignation—or the Big Quit, as it’s also called—implies that for millions of workers, the disruptions and upheavals of the Covid-19 pandemic provided a long-awaited reason to pack up and head out to find better employment somewhere else. But that’s the problem: Workers didn’t just decamp to new jobs for higher wages and better benefit packages, much to the chagrin of thousands of employers. If It’s Not About the Money, What Is It Exactly? The answer appeared in the very article that used the phrase “Great Resignation” for the first time, and got lost in the media noise that followed. As the Boston Globe brilliantly mused on the subject last summer: “Lots of people were having revelations about how they wanted to spend their time moving forward.”[2] The simplest answer, once again, proves the correct one. Time. The primary cause of the entire workforce migration problem. Why was time a primary factor and a catalyst for change last year? Time is a fundamental aspect of all employment relationships. Employees are capital assets with the unique ability to appreciate in value over time (and they are the only business asset that can innately do so). The flip side of this ability to appreciate in value over time is that employees have a finite lifespan themselves, with careers lasting on average no more than fifty years (with opportunities during the course of that career changing and, in many cases, diminishing over time.) While the Covid-19 pandemic created disruption, uncertainty, and isolation for workers from their respective places of business, it also gave them time to examine their place in life and how they wanted to spend their time. For many employees, work — at least the way they’ve been managing it — isn’t part of their revised thinking. Particularly when they are making this assessment in the context of their own mortality. For many workers, these revelations led to a reassessment of personal value and, more importantly, a desire to have this new appreciation of self-worth reflected in their career trajectory. Managing the Great Reevaluation Employers must take stock post-pandemic of this seismic shift in value judgment by the workforce. Indeed, it is high time for management to bring their expectations into realignment with those of their employees through new strategies. Listed below are just a few examples of time-oriented initiatives that can be managed through appropriate policy guidance from leadership and implemented through human resources. Eyes on the Prize: The uncertainties of the last two years have made us more reluctant than ever to waste time on trivial or pointless tasks. Make sure employees see how their work contributes not just to the company’s bottom line but to its larger mission. Connect the dots and link their success to the larger success of the organization. Us Time, Not Me Time: One thing the pandemic showed us is that some work can be handled just as effectively at 9 pm as at 9 am. Whether working from home or in the office, employees are seeking more control over worktime and personal time. Understanding how workers want to spend their time and creating collaborative flex programs will lead to more productive and more effective utilization of time. Self Driving: Nothing defines the human condition better than the quest for self-determination.[3] Jobs that offer low autonomy feel infantilizing and demoralizing rather than meaningful. Case in point: According to the New York Times last June, Amazon fulfillment centers generally see a turnover rate of around 150% a year.[4] Create opportunities for employees to decide how to do their work.[5] Own It: Treat workers as professionals by encouraging independent problem-solving. Instead of telling employees how to do a task, explain your objectives and let them figure out the best way to get there. Taking ownership of a project gives workers a sense of purpose and a connection to the larger mission.[6] The Great Reevaluation may be a rude awakening for employers, but properly managed, will lead to a stronger, more committed workforce acting on their behalf. ______________________________________________________________ Howard Matalon, our Employment Practices Partner, provides practical and impactful legal and human capital guidance to better manage and protect the value of your most important capital asset: the workforce that makes your business run. Howard’s email address is hmatalon@olenderfeldman.com. [Photo by Kevin Ku on Unsplash] [1] https://www.washingtonpost.com/business/2021/12/08/where-workers-quitting-jobs/ [2] https://www.bostonglobe.com/2021/06/22/business/burnout-is-one-key-predictors-turnover-what-know-about-great-resignation/ [3] https://www.verywellmind.com/what-is-self-determination-theory-2795387 [4] https://www.nytimes.com/2021/06/15/us/politics/amazon-warehouse-workers.html [5] https://www.forbes.com/sites/stanphelps/2019/09/24/if-you-love-your-employees-set-them-free-autonomy-is-key-to-employee-engagement/?sh=5e5bfdf868e6 [6] https://psycnet.apa.org/doiLanding?doi=10.1037%2Fa0024518

OlenderFeldman is thrilled to announce that Howard A. Matalon, Craig D. Bronsnick, and Marguerite Kniesser have been named among New Jersey's top lawyers by Super Lawyers*. To see the full announcement: click here. *No aspect of this advertisement has been approved by the Supreme Court of New Jersey or the American Bar Association. A description of the standard or methodology on which the accolades are based can be found here.

Consolidation of healthcare service providers continued at a rapid pace in the first quarter of 2022. The acquisition of a Queens and Long Island, New York multi-specialty physician practice by Summit Health is OlenderFeldman’s healthcare M&A deal of the first quarter 2022. OlenderFeldman LLP, represented Medical Associates in connection with its sale to New York-based healthcare practice network Summit Health. Medical Associates is a multispecialty physician group that provides primary and preventative care throughout Queens and Long Island. With offices in Queens, Nassau, and Suffolk counties, the acquisition enables Summit Health to strategically expand its growing presence in New York, following the opening of two Manhattan multispecialty family practices. Craig D. Bronsnick, Esq., Partner in the OlenderFeldman Corporate & Transactional department and leader of the firm’s Healthcare practice, managed a team that also included the firm’s Employment and Real Estate practices in negotiations with Summit Health in order to transition all clinical and non-clinical employees and multiple real property lease negotiations. “Dr. Rajesh Raina built Medical Associates into a preeminent primary and preventative care practice of board-certified doctors throughout Queens and Long Island over two decades,” said Mr. Bronsnick. “We were delighted to work with the Medical Associates team on all aspects of this deal from Letter of Intent through consummation of the transaction. Summit Health now avails itself of Medical Associates’ robust reputation for quality while facilitating a seamless management transition with continuity of outstanding patient care.” Summit Health has more than 2,500 providers, 12,000 employees, and over 340 locations in New Jersey, New York, Connecticut, Pennsylvania, and Central Oregon.

On occasion, individuals and companies will receive a subpoena in relation to a litigation that the recipient has no knowledge of, nor has any interest in the outcome. A subpoena received in relation to an ongoing civil suit is generally not an indication that a party to the litigation believes the recipient is liable or otherwise did anything wrong – it is common discovery practice in civil litigation for parties to seek information from non-parties that may have knowledge of the facts and circumstances related to a dispute. Nevertheless, receiving a subpoena is akin to being caught in a strangers’ crossfire—and the unexpected costs and expenditures associated with responding to a discovery demand in relation to a dispute that you are not a “party” to is frustrating to say the least. If you receive a subpoena, there are several practical steps you can take to ensure your rights are protected: What exactly is a “subpoena?” The word “subpoena” is thrown around so often in media that it is worth a quick primer on what a subpoena actually is. A subpoena is a formal document served by a party to a litigation, or governmental authority, under the color of court authority that requires an individual or business entity to respond either through the production of documentary evidence or testimony. Generally, a subpoena commands the recipient to (1) produce documents, electronically stored information, or other information (“Subpoena Duces Tecum”); (2) testify at a deposition, hearing, or trial (“Subpoena Ad Testificandum”); or (3) permit inspection of a premises (or a combination of two or all three). If the subpoena seeks information from the recipient during the discovery process (as opposed to trial testimony), the recipient must respond to the subpoena as a failure to respond (or challenge the subpoena through the legal process) may result in the recipient being held in contempt of court or being subject to an order requiring compliance. What obligations are triggered by a subpoena? Each subpoena comes with a different set of considerations. Take note of the basic information comprehendible from a reading of the subpoena. For example, the subpoena should include the “caption” of the lawsuit which identifies the parties. Identify which, if any, of the parties you or your business may have had dealings with and take reasonable steps to preserve documents related to that party. If your business has a document retention policy, issue a “litigation hold” to all relevant employees to prevent the deletion or destruction of any of the information being requested (even if you think you will challenge the subpoena through the legal process). Further, if the subpoena seeks documents from you, take note of the subpoena’s deadline to respond so you know how much time you will have to gather responsive information. Generally, subpoenas seeking documents are drafted broadly to encapsulate all documents conceivably possessed by the recipient that are relevant to a dispute—and the amount of time the party serving the subpoena will likely be insufficient. Relatedly, consult with your team and evaluate the anticipated burdens and costs associated with making the requested items available. Take further note of any confidentiality obligations that may exist between you and any party (or non-party) that may be referenced in your response to the subpoena. Oftentimes, a contract (e.g., a Master Services Agreement, Statement of Work, Work Order, etc.) will require notice of the receipt of any subpoena or other legal process that could result in the disclosure of documents subject to the confidentiality obligations in an agreement. If your business has legal counsel, same can assist with the foregoing. Is it worth calling and incurring fees for Counsel? Yes. If a subpoena recipient has a lawyer, it should contact its lawyer and immediately provide counsel with a copy of the subpoena. If the recipient does not have a lawyer, it should consider consulting and retaining counsel as counsel can advise on the available options and to assist with the response to the subpoena to ensure the recipient’s privileges and business relationships are protected. By way of non-exhaustive example: Counsel can advise whether there are grounds to seek modification or withdrawal of the subpoena (e.g., on the basis that the subpoena is overly broad, unduly burdensome, or seeks documents protected by privilege). Counsel can assist in negotiating to “narrow the scope” of the subpoena, or, apply for judicial remedies (e.g., a motion to quash or motion seeking a protective order). Counsel can negotiate and/or request a Confidentiality Order to ensure all documents produced or testimony obtained is reasonably protected from public disclosure. Counsel can assist with securing additional time or conditions on the response to the subpoena. Counsel can advise on the recoverability of any costs associated with the recipient’s response to the subpoena. Counsel can assist the recipient in helping review documents for responsiveness and privilege. Thus, while it is undoubtedly frustrating to receive a subpoena and incur the expense required to respond to same, experienced counsel can assist the recipient in navigating through the process for an efficient, cost-effective outcome that protects the recipient while satisfying its obligation to respond to or oppose the subpoena. For further guidance and counsel on responding to a subpoena, or any other related matters facing your business, please contact Sean Rose (srose@olenderfeldman.com) in OlenderFeldman’s Commercial Litigation Group.

The changes to the real estate market brought upon by the COVID-19 pandemic combined with the convenience and ease of use of online platforms like Airbnb, VRBO, and HomeAway have led to an explosion in the short-term rental market throughout the country. As such, many individual and business investors are looking to capitalize on this heightened demand by either converting their already owned properties into short-term rentals or purchasing new properties. Prior to deciding to wade into the waters of the short-term rental market, potential investors should familiarize themselves with current laws related to short-term rentals in the city or municipality where the property is located. In an effort to curb the influx of short-term rentals, many cities and towns across the country have instituted regulations that limit or block certain short-term rentals. It is therefore important for the potential investor to understand the local laws to determine how best to utilize the property. Short-term rentals are an attractive opportunity for many investors due to the potential to charge higher rental fees while simplifying and streamlining the marketing for the property through numerous platforms. Additionally, an investor can avoid a long-term landlord-tenant relationship that would limit the owner’s ability to evict the renter and/or use the property when needed. Despite these benefits, short term rentals bring with them an increased potential for wear and tear, property damage, and liability for on-site injuries. Common Sense Steps for Short-Term Rentals First, an investor must obtain the proper insurance coverages for both property damage and individual liability. Thereafter, an investor must also take steps to ensure that the property is properly supervised, managed, and maintained. Most individual owners do not have the time to handle day-to-day management and should therefore consider hiring a property manager to deal with the day-to-day maintenance and upkeep between rentals. A property manager will play a big part in determining how financially successful a short-term rental property will be. Consequently, it is a wise investment to have a detailed property management agreement drafted establishing and detailing the duties, responsibilities, and payment structure of the property manager. While a good property management agreement will be tailored to the specific property and property manager, at a minimum, it should in some way address the following issues: How long is the agreement in effect? When and how can the agreement be terminated? Can the owner terminate the agreement at will and/or for cause? Payment arrangement. How is the property manager being paid? In order to boost the gross returns and encourage the property manager to keep the property as profitable as possible, this can be tied to a percentage of the gross or net income generated by the property. How (and on what platforms) is the property going to be marketed? Who is in charge of maintaining the postings? Can the property manager enter into direct bookings outside of the platforms? How will rental rates be determined? Will there be any other fees, i.e. reservation fees, cancellation fees, pet fees, cleaning fees? Will security deposits be required? How will they be held? What physical bank accounts will hold the monies received from the property? Who will own and/or be responsible for said accounts? How will business and rental records be kept? Who will be entitled to see the records and how often will they be provided? Who will be responsible for maintaining, inspecting, and repairing the property? How will the property be “turned over” and cleaned between guests? Who will be responsible for purchasing and restocking the necessary household items for the property? Who will be responsible for guest relations? Answering these important questions and entering into a detailed property management agreement will offer you the protections needed to avoid potential disputes and litigation. It will also be the backbone of a profitable rental business. For further guidance and counsel on short-term rentals, or any other commercial or residential related property matters, please contact Jason Hawrylak (908-827-5537 or jhawrylak@olenderfeldman.com) in OlenderFeldman’s Real Estate Group.

The CCPA went into effect on January 1, 2020. Thereafter, the CCPA was effectively amended via the CPRA. Critically, though the CPRA becomes effective on January 1, 2023, it covers data collected as of January 1, 2022. However, enforcement does not commence until July 1, 2023. Unfortunately, the final regulations related to the rollout of the CPRA have not yet been finalized. THE CCPA The CCPA applies to you if: You have annual gross revenues in excess of $25 million (whether or not you conduct business in California – so assume if you conduct any business in California and have revenues over $25 million, the law applies); OR You buy OR receive for commercial purposes OR sell OR share for commercial purposes, the personal information of 50,000 or more consumers, households or devices; OR You derive 50% or more of your annual revenue from selling consumers’ personal information; AND You are any form of entity (including a sole proprietorship); AND You collect consumers’ personal information or someone collects it on your behalf; AND You (alone or with others) determine the purposes and means of the processing of the personal information (under GDPR, this would make you a “controller”); AND You conduct business in California (which would include selling to people located in California, having customers in California, etc.). The CCPA excludes from the term “personal information” the following: Publicly available information (presumably easily and legally publicly available); PHI already covered by HIPAA; The sale of information to or from a consumer reporting agency for use in a consumer report in accordance with the Fair Credit Reporting Act; Personal information collected, processed, sold or disclosed in connection with the Gramm-Leach-Bliley Act or the Driver’s Privacy Protection Act of 1994, or the extent of a conflict with the CCPA. The term “consumer” includes: Anyone in California for other than temporary or transitory purpose; and Anyone who loves in California who is outside the state for temporary or transitory purposes. THE CPRA The first thing to recognize with respect to the CPRA is that it is basically a supplement or amendment to the CCPA. Thus, the provisions of CCPA remain UNLESS replaced by the CPRA. As a result, the analysis below focuses on changes/supplements to the CCPA by the CPRA. Applicability of the CPRA: Business had at least $25 million in annual gross revenue as of Jan 1 of the prior year (this makes clear that the revenue requirement is annual whereas the CCPA was slightly ambiguous) ; OR Business buys, sells or shares personal information of 100,000 or more California consumers or households [THIS USED TO BE 50k]; OR Business derives more than 50% of its revenue from selling or sharing personal information. Primary Changes from CCPA: The exception for employee personal information and B2B personal information ends on January 1, 2023 (largely involves California employees). All personal information collected is subject to limits of principles of necessity, proportionality and compatibility. Companies must provide notice at or before point of collection of personal information with such notice indicating whether information will be sold or shared, length of data retention, and additional disclosures below as to “sensitive personal information.” Creation of a new category of “sensitive personal information” more in line with GDPR, and increasing obligations with respect to “sensitive personal information.” Limits to exceptions of CCPA’s existing right to delete. Explicit rights, similar to GDPR, with respect to personal information. Expanding “Do Not Sell” opt-out to mere “sharing” for purposes of cross-context or third-party advertising. Additional exemptions from compliance spelled out. Must affirmatively respect opt-out preference signal from consumers. New vendor flow-down requirements that will require review of prior CCPA flow-down contracts. Specific requirements for all such contracts. Addition of independent security obligation – reasonable security procedures and practices appropriate to the nature of the personal information to protect that personal information from unauthorized or illegal access, destruction, use modification or disclosure. New regulations coming to address processing that presents “significant risk” to consumers’ privacy or security. What Needs To Be Done In anticipation of January 1, applicable businesses need to: 1. Engage in data mapping to determine what applicable personal information they have, where it is located, with whom it is (or is to be) shared/sold. 2. Review security used in connection with applicable personal information. 3. Determine any third-party contractual obligations to comply with “applicable law,” CCPA, or the CPRA. 4. Determine which vendors/contractors/service providers receive or process any of the subject personal information on behalf of the business or in connection with any contractual obligation or right. 5. Determine which of the above CCPA/CPRA obligations need to be implemented (i.e., those which are not currently in place). 6. Update website Privacy Policy. for more information, contact: Michael Feldman at mfeldman@olenderfeldman.com, or 908-964-2486

In 2018, the European Union (“EU”) enacted the General Data Protection Regulation (“GDPR”), vastly altering the landscape of data privacy laws. With its broad scope and potentially hefty fines for non-compliance, the GDPR called for widespread change to the way data was collected, stored, transmitted, and secured. Shortly after, California passed the first major data privacy law in the United States – the California Consumer Privacy Act, which became effective January 1, 2020, providing California consumers with rights to the data that related to them. Although many federal privacy laws have been proposed, there is currently no comprehensive federal privacy law in the US. Rather, the US remains dominated by state and business sector (i.e., HIPAA) data protection laws. While all states have data breach laws, there are currently five states that have data privacy laws either in effect or which will go into effect in 2023: California California Consumer Privacy Act (“CCPA”) California Privacy Rights Act (“CPRA”) Colorado Colorado Privacy Act Connecticut Connecticut Data Privacy Act Virginia Virginia Consumer Data Protection Act Utah Utah Consumer Privacy Act The CCPA provides California consumers the Right of Access, which is “the right for a consumer to access from a business/data controller the information or categories of information collected about a consumer, the information or categories of information shared with third parties, or the specific third parties or categories of third parties to which the information was shared; or, some combination of similar information,” the Right of Deletion, which is “the right for a consumer to request deletion of personal information about the consumer under certain conditions,” the Right of Portability, which is “the right for a consumer to request personal information about the consumer be disclosed in a common file format,” and the Right to Opt-Out of Sales, which is “the right for a consumer to opt out of the sale of personal information about the consumer to third parties.” All formal data privacy laws provide for these rights to consumers in the states in which the law has been enacted. The CPRA, which will be fully operative beginning January 1, 2023, with enforcement commencing 6 months later, is a rigorous and all-encompassing privacy protection bill for California consumers which supplements the CCPA. Along with all the same privacy rights as the CCPA, the CPRA also gives California consumers additional rights such as the Right of Rectification, which is “the right for a consumer to request that incorrect or outdated personal information be corrected but not deleted,” the Right Against Automated Decision Making, which is “a prohibition against a business making decisions about a consumer based solely on an automated process without human input,” and the Right of Restriction, which is the right for a consumer to restrict a business’s ability to process personal—and in only California’s case, sensitive—information about the consumer. Furthermore, under either statute, California consumers have a limited Private Right of Action for certain violations, under which a consumer may seek civil damages from a business for violations of the statute. For more information about the CCPA and the CPRA, see California Consumer Privacy Act (“CCPA”) and California Privacy Rights Act of 2020 (“CPRA”) (effective January 1, 2023). The Virginia Consumer Data Protection Act, which will also become effective January 1, 2023, along with similar, but not identical, privacy rights as the CCPA, will provide Virginia consumers (a group more narrowly defined than under the CCPA) a Right of Rectification, a form of Right Against Automated Decision Making which provides a right to opt out of certain automated decision making, and a form of Right of Restriction with “the right to opt-out of processing for profiling/targeted advertising purposes.” The Colorado Privacy Act and the Connecticut Data Privacy Act, which become effective on July 1, 2023, provide the respective Colorado and Connecticut consumers with similar privacy protections. The Utah Consumer Privacy Act, which will become effective on December 31, 2023, along with similar privacy protections as the CCPA, will provide Utah consumers with a form of Right of Restriction with “the right to opt-out of processing for profiling/targeted advertising purposes.” Click on this link to view a table providing an overview of the upcoming data privacy law changes. Importantly, each of the above-referenced data privacy laws has its standard of applicability – generally based upon the number of residents (i.e., the laws generally only apply to data collected from the individual state at issue) whose personal data is obtained/collected, the purpose for which the data is obtained and what the data is used for. Businesses need to be aware of the data they collect, the location and number (quantity) of the consumers whose data they collect, and have proper processes and procedures in place to determine the applicability of the various data privacy laws and where applicable, the ability to comply. For more information on compliance, please contact Michael J. Feldman, Esq. (mfeldman@olenderfeldman.com or 908-964-2486).

On January 5, 2023, the Federal Trade Commission (“FTC”) released a Notice of Proposed Rulemaking that seeks to ban employers from imposing and enforcing existing non-compete clauses. The FTC’s proposed rule would serve, with minor exceptions, as a complete ban on non-compete clauses and drastically change the employer and employee relationship as well as competition in the marketplace as a whole. OlenderFeldman LLP has prepared this FAQ to address the proposed rule and what it means for those affected. Q. What is the FTC’s proposed rule? A. The FTC has proposed a new rule that would make it unlawful for an employer to enter into or attempt to enter into a non-compete clause with a worker; maintain with a worker a non-compete clause; or represent to a worker that the worker is subject to a non-compete clause. Q. How is “Non-Compete Clause” defined? A. As currently written, the proposed rule defines a “non-compete clause" as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.” In determining whether a contractual provision is considered a non-compete clause, it appears that the determination will be decided on how the provision functions. While the proposed rule does not include other restrictive employment covenants within its definition, e.g., non-disclosure agreements (“NDAs”) and non-solicitation agreements, in the event that such contractual provisions are unusually broad in scope and have the effect of preventing a worker from seeking and/or accepting employment, then such provisions would be viewed as a de facto non-compete, and therefore, unenforceable. Q. How is “Employer” defined? A. As currently written, the proposed rule defines “employer" as any person, partnership, corporation, association, or other legal entity, that hires or contracts with a worker to work for them. Q. How is “Worker” defined? A. As currently written, the proposed rule defines “worker" as a natural person who works, whether paid or unpaid, for an employer. The term “worker” includes, without limitation, an employee, individual classified as an independent contractor, extern, intern, volunteer, apprentice, or sole proprietor who provides a service to a client or customer. Q. What does the FTC’s proposed rule seek to accomplish? A. The FTC’s proposed rule seeks to encourage competition, benefit workers, and prohibit anticompetitive harm to the labor, product, and service markets. Q. Is the FTC’s proposed rule retroactive? A. Yes. As currently drafted, the proposed rule would require employers to rescind existing non-compete clauses and provide notice to the worker of its rescission. Employers will be required to provide notice to both current and former workers within 45 days of rescinding the non-compete clause. Q. What exceptions are there to the FTC’s proposed rule? A. The proposed rule currently includes a limited exception that allows for a non-compete clause in connection with the sale of a business. In particular, the proposed rule will not prohibit a non-compete clause (as defined by the proposed rule) when it is entered into: By a person who is selling a business entity or otherwise disposing of all of the person’s ownership interests in the business entity; or By a person who is selling all or substantially all of the business entity’s operating assets. Note, however, that this exception would only apply when the seller is an owner, member, or partner holding at least a 25% ownership interest in the business entity. While the exception to the proposed rule is somewhat unclear, it appears that an owner, owning less than 25% of the selling entity, may be subjected to a non-compete clause with the sale of the business, so long as the owner is not a worker as defined in the proposed rule. Q. Will all non-compete provisions be prohibited? A. It appears that the proposed rule only applies to non-compete provisions between employers and workers. As currently drafted, the proposed rule will not apply to other types of non-compete clauses, e.g., non-compete clauses between two businesses, where neither party is a “worker” as defined under the proposed rule. Notwithstanding, if a non-compete clause is not covered by the proposed rule, it is still subjected to federal and state laws. Q. If passed, when would the FTC’s proposed rule be effective? A. Currently, the FTC is allowing public comment on the proposed rule. If the FTC’s proposed rule is approved, employers will have 180 days from its date of publication in the Federal Register to rescind existing non-compete provisions. Q. What effect does the FTC’s proposed rule have on the worker? A. The proposed rule is only a proposal and does not affect any existing non-compete provision that a worker may be a signatory to. Notwithstanding, the proposed rule is seemingly employee friendly. Indeed, non-compete clauses typically prohibit workers from switching jobs and, as a result, often restrict their ability to earn higher wages and potentially obtain better working opportunities. If the FTC’s proposed rule is implemented, it will invalidate non-compete provisions as indicated above and allow for more labor competition in the marketplace and, in turn, provide the worker with the ability to freely seek employment opportunities and higher paying positions. Persons seeking employment, however, will lose the ability to freely agree to a non-compete provision in exchange for consideration that may otherwise have been offered absent the prohibition. Q. What effect does the FTC’s proposed rule have on the employer? A. Although employers will be prohibited from using non-compete provisions, as indicated above, employers can utilize other mechanics of contract to protect valuable investments/confidential information of their business, such as: NDAs, non-solicitation agreements, and confidentiality provisions. However, an employer must be wary of the provisions' scope so as not to create a de facto non-compete provision, which would then be unenforceable. Additionally, an employer can protect its investment in the worker by contracting for a term of employment. An employer might establish a “term of employment” that requires the worker to pay the employer for training costs if the worker’s employment terminates within a specified time period, so long as the required payment is reasonably related to the costs the employer incurred for training the worker. An employer may also structure compensation in a manner that is contingent on a minimum “term of employment”. Q. What should employers be doing now? A. Even if the proposed rule is published and implemented, employers can continue to include confidentiality provisions and other restrictive covenants within their agreements. In the interim, employers should perform a thorough review of all agreements to identify current non-competes and be prepared to address same should the proposed rule be implemented. Additionally, employers should review said agreements to ensure the enforceability of their other restrictive covenants contained therein. While the likelihood of the rule being implemented is unknown, if published, employers could face considerable time constraints to comply with the requirements of the rule. Therefore, employers should begin to develop a plan and have one in place before a decision is rendered on the proposed rule. Further information or guidance concerning the proposed rule can be obtained from info@olenderfeldman.com">OlenderFeldman LLP.

Our 2022 M&A transactions continued the 2021 trend of a heavy emphasis on sales to private equity-backed strategic buyers vs. direct sales to private equity, by a factor of 3:1, continuing to evidence that platform transactions from prior years were executing their growth-by-acquisition strategy. A significant number of M&A transactions evidenced downward pressure on enterprise value, clearly showing the impact of the increased cost of debt for leveraged transactions. Equity/quasi-equity capital raising transactions were heavily weighted in favor non-priced rounds vis-a-vis convertible instruments (SAFEs and convertible notes), but Series A+ transactions generally held their valuations and were successful in raising their target. Click here for OlenderFeldman's 2022 Overview: OF Transactions Overview 2022 We hope this information on companies we represented as transaction counsel in 2022 is helpful insight into the types of companies and industries that are attractive to buyers and investors in the current business environment.

New York Legislature Passes the LLC Transparency Act, Aims to Curb Illicit Business Activities. Introduction. New York is poised to implement the nation’s first publicly available beneficial ownership registry after the New York State Assembly and Senate passed the LLC Transparency Act[1] (the “NY Act”) last month. The bill is now bound for the desk of Governor Kathy Hochul. On June 20, 2023, the New York State Assembly ratified the NY Act, signaling a substantial move towards increased transparency in the state. The law requires the disclosure of ultimate beneficial ownership information for limited liability companies (“LLC”) at the time of establishment or when qualifying to conduct business in the Empire State. This obligation also applies to LLCs created under New York law and to foreign LLCs permitted to conduct business in the state prior to the NY Act's enactment. The legislation, if approved by Governor Hochul, will take effect a year after its endorsement. What the Law is Today. The current law in New York does not require the disclosure of beneficial owners of LLCs. This means anyone can form an LLC in New York without having to disclose their identity or the identity of the other owners of the LLC. Investors have enjoyed this inherent privacy and New York has traditionally been a favored destination for both domestic and foreign investors seeking to establish a business presence in the United States. The dynamic and multi-billion dollar New York City real estate market is especially popular, attracting numerous LLCs and other entities that own a substantial portion of properties throughout the city. The forthcoming regulations will now require these companies to publicly disclose their beneficial owners. Proponents of the legislation argue this is a significant step towards transparency and not only assures a more accountable business environment, but allows all stakeholders to follow and understand the flow of investments. The Federal Counterpart - The Corporate Transparency Act. The introduction of the New York LLC Transparency Act aligns with a broader national movement towards increased business transparency, reflected in the federal Corporate Transparency Act (the “CTA”) passed by Congress back in 2021, as part of the Anti-Money Laundering Act of 2020. The CTA requires "reporting companies" to report their beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”), a department of the U.S. Treasury Department. Under the CTA, beneficial owner information is mainly reserved for law enforcement and national security purposes. The collected information is kept confidential, not publicized, and treated as sensitive information under the highest security standards. The CTA is slated to take effect on January 1, 2024. Comparing the NY LLC Transparency Act and the Federal Corporate Transparency Act. The NY Act, fashioned after the CTA, employs the same statutory language and provides similar disclosure exemptions for eligible companies. Its objective, akin to the CTA, is to combat business crime and corruption. More specifically, the NY Act, like the CTA, governs both domestic and foreign entities required to file with the government for conducting business, but the NY Act specifically targets LLCs operating in New York. The NY Act incorporates key definitions from the CTA, including "beneficial owner", and models its exemptions after those found in the CTA. Furthermore, entities can fulfill NY's reporting requirements by filing a copy of their FinCEN report submitted under the CTA. Thus, these similarities make compliance streamlined for those already familiar with the federal CTA rules, offering an integrated approach to regulatory clarity. The stark difference between the two is that the NY Act makes the collected information publicly available. The NY Act requires New York's secretary of state to maintain an online registry with full legal names of beneficial owners and entity information. This contrasts the CTA, where the collected information remains confidential, with limited exceptions. The publicized approach of the NY Act is novel in the U.S., although common in the EU, UK, and other jurisdictions. Available Exemptions & Penalties for Noncompliance. Provisions are in place for beneficial owners with significant privacy concerns to apply for waivers under the NY Act, preserving their name and/or business address confidentiality. However, given the NY Act's overarching objective to bolster transparency, a persuasive demonstration of the need for confidentiality would be necessary to qualify for a waiver. With respect to compliance, if a company fails to disclose beneficial owners information, it is labeled "delinquent" after two years and two months following a notice from the New York Department of State. This comes with a $250 fine and removal of the company's information from state records. Although uncertainly remains on the compliance front as the NY Act does not define the term "delinquency” and is silent on whether a delinquent company could be dissolved or lose its New York business rights. What’s Next. As Governor Hochul considers signing the NY Act, LLCs either operating in New York or contemplating doing so should start preparing for potential enforcement of these new disclosure mandates. This could involve exploring applicable exemptions, weighing if they have significant privacy concerns warranting a public registry waiver, or re-evaluating their preparedness to conduct business in New York altogether. Consequently, a proactive approach is crucial in navigating these impending transparency requirements, ensuring companies align their strategic decisions with both their operational necessities and the evolving legal landscape. For more information, contact Frank Vito: Fvito@olenderfeldman.com, 908-964-2446 [1] Senate Bill S00995B, Assembly Bill A3484A.

With the EU-U.S. Privacy Shield Framework no longer available as a legal mechanism to transfer personal data from the EU/EEA/UK to the US (leaving most businesses to rely upon Standard Contractual Clauses), the U.S. has finally completed negotiation of the EU-U.S. Data Privacy Framework (“DPF”) to replace Privacy Shield. This memo addresses the basic considerations and issues for joining the DPF. Joining the DPF Program Confirm Entity’s Eligibility. The entity/business must be subject to the jurisdiction of the Federal Trade Commission (“FTC”) or Department of Transportation (“DOT”). This generally includes any person or entity that practices in or affects commerce. The FTC does not have jurisdiction over most banks and comparable institutions, telecom companies, interstate transportation companies, air carriers, labor associations, most non-profits, and packer and stockyard businesses. The FTC also only has jurisdiction over insurance activities in limited circumstances. The DOT generally has jurisdiction over air carriers and, with the FTC, ticket agents. Develop a DPF-Compliant Privacy Policy Statement. Many entities already have a privacy policy. While much of the privacy policy may already be compliant, DPF requires specific provisions so the policy complies with the DPF Principles. Privacy policies previously developed under Privacy Shield must be updated to refer to the entity’s commitment to comply with DPF. As part of the certification process, you must submit your privacy policy to the U.S. Department of Commerce’s International Trade Administration (“ITA”) for review and to confirm the policy is compliant with DPF Principles. If there are any changes that need to be made to a policy to comply with DPF, the U.S. Department of Commerce’s International Trade Administration (“ITA”) will inform you of those changes that need to be made. To be compliant with the DFP Principles, the privacy policy must incorporate and conform to the DPF Principles and include the following, generally: Notice: You must inform individuals in clear and conspicuous language about: Your participation in the DPF program, with a link to the DPF list of compliant companies; Your commitment to comply with DPF Principles as set forth at the DFP website (https://www.dataprivacyframework.gov/). The types of data collected and the purposes for which it is collected and used; Contact information for inquiries or complaints; Third parties to whom you disclose data and the purposes for which you do so; The right of individuals to access their data and limit your use and disclosure of same; The independent dispute resolution body to which complaints can be made and the right to invoke binding arbitration; The fact that you are subject to powers of the FTC, DOT, or other applicable U.S. governmental body; Provide the name of any privacy program in which the entity is a member; Provide a publicly available and accurate location for the privacy policy. The only exception to this is if the entity is solely self-certifying as to human resources data. In this case, the privacy policy may be made internally available only; The requirement to disclose personal information in response to lawful requests by public authorities; and Your liability for onward transfers to third-parties. Choice: You must offer individuals the right to opt out and to choose whether and to what extent their information is used or disclosed. Accountability for Onward Transfer: Arrangements with third-party controllers must limit data use or processing to those purposes consented to by the data subject and such arrangements must be subject to the same level of protection as the DPF Principles require and done in accordance with your obligations under the DPF Principles. Third-party controllers must notify you if they cannot meet their obligations. Security. You must take reasonable and appropriate steps to protect personal information. Data Integrity and Purpose Limitation: You must limit personal information to the information that is relevant for the purposes of processing. Personal information cannot be processed in a way that is incompatible with the purposes for which it has been collected or as authorized by the individual. These limitations apply for as long as you retain such information. Access: Individuals must have access to personal information about them that you hold, with the right to correct, amend, or delete that information where it is inaccurate. Recourse, Enforcement and Liability: You must have mechanisms for assuring compliance with the DPF Principles, and recourse and consequences for non-compliance. At minimum, these must include: Identifying the independent recourse mechanism selected for disputes with those who believe their privacy rights were violated by the entity. There are several private organizations which may be used (i.e., BBB, TRUSTe, AAA, JAMS, Direct Marketing Association, etc.), or you can agree to have certain public entities (EU data protection authorities – at a charge of $50) serve as your dispute resolution entity; Having procedures in place for verifying compliance with DPF. This can be accomplished through self-assessment or third-party assessment; Setting forth your obligations to remedy any failure to comply with the DPF Principles and acceptance of consequences for any failure to comply; and Designating an internal contact for handling questions, complaints, access requests and all other issues which may arise under DPF. The contact can be a corporate officer or someone else at the company. The entity must respond to all requests from individuals in connection with DPF (i.e., a complaint) within 45 days. Make the Required Contribution for the Binding Arbitration Mechanism. The U.S. Department of Commerce agreed to maintain a fund to which participating organizations will be required to contribute to cover arbitration costs for EU, UK, or Swiss individuals invoking arbitration to determine whether their privacy rights have been violated. The contribution must be made at the International Centre for Dispute Resolution-American Arbitration Association’s (ICDR-AAA) website at http://go.adr.org/privacyshieldfund.html. Review Information Required to Self-Certify. Review and compile all required information prior to self-certifying online. The decision to self-certify is voluntary. However, compliance with DPF upon self-certification is compulsory. Once such an organization self-certifies and publicly declares its commitment to adhere to the DPF Principles, that commitment is enforceable under U.S. law. To self-certify, an organization must have the following information (in addition to the above): Name of organization, contacts, and corporate officer, including mailing address, e-mail address, telephone and fax numbers; Other Covered U.S. Entities and U.S. Subsidiaries, including a list of all other entities or subsidiaries of the organization that are also adhering to the DPF; Organization’s annual revenue ; Description of activities with respect to personal information received from the EU; and Description of the entity’s privacy policy for such personal information (see above); Submit Self-Certification to the ITA. This can be accomplished through the “Self-Certify” link on the DPF program website. Submission also requires the appropriate self-certification fee, which is based upon the size of the entity seeking certification. EU-U.S. DPF benefits are valid from the date on which the Department places the organization on the Data Privacy Framework List. The Department will only place an organization on the Data Privacy Framework List after having determined that the organization’s initial self-certification submission is complete, and will remove the organization from that list if it voluntarily withdraws, fails to complete its annual re-certification, or if it persistently fails to comply with the Principles. Please contact Michael J. Feldman, Esq. at 908-964-2486 or mfeldman@olenderfeldman.com for more information on the DPF program and for assistance in seeking certification.

A successful professional partnership, whether doctors or lawyers, accountants or architects, requires more than a group of skilled service providers practicing their craft together. A robust partnership agreement will protect your partnership’s financial position, maximize operational efficiencies and establish a path to longevity. This article addresses 5 key provisions for inclusion in a partnership agreement. Governance Your agreement should establish clear governance procedures that are uniformly applied to resolve potential conflicts. Depending on the size and composition of your partnership, it may not be efficient to require that all partners be consulted and/or vote on all matters affecting the partnership. Identify decision-makers in your agreement. These are not necessarily “rain makers” focused on generating business, but those partners who have demonstrated their ability to thoughtfully evaluate complex issues and act decisively to execute difficult decisions in the best interest of the partnership at large. Once decision-makers have been identified, meeting and voting procedures should be established. Your agreement should bind all partners to the decisions of your manager group, but also create processes to enable non-managerial partners to call and attend special meetings to address emerging issues in a timely manner. If partners are reluctant to cede complete control to a designated group of managers, consider identifying a subset of decisions that are so fundamental to the business that unanimous or supermajority partner approval should be required. These decisions may include: the admission or removal of a partner, hiring or firing key non-partner employees, entering into material contracts over a specified dollar value, establishing an annual operating budget, capital calls and securing third-party financing, capital expenditures, liquidity events, and dissolution. Finally, to encourage transparency and build trust amongst partners, your agreement should identify how and when information and decisions are communicated with non-managerial partners. Capital Your agreement must address capital needs: how and when partners may be required to commit capital to fund the partnership’s business operations and the consequence of a partner’s failure or refusal to fund. Even though many partnerships will not require partners to contribute additional capital, those partnerships still need to address in your agreement what happens if the business needs additional capital. One option is to treat voluntary capital contributions as a loan by the contributing partner. The loan will typically accrue interest, be repaid out of operating cash prior to making distributions, and accelerate on certain qualifying events (upon the sale or dissolution of the partnership or the contributing partner’s exit). Alternatively, additional capital can dilute the non-contributing partners (depending on the circumstances under which the capital is contributed and risk of repayment, dilution can be proportionate or disproportionate to incentivize participation). If all partners are unwilling or unable to fund business operations, then the partnership must look to third-party financing sources. Here again your agreement must identify who has the right to source and secure financing. Distributions Your agreement should specify rules and procedures for cash distribution while ensuring that the partnership maintains adequate cash to cover operational costs and reinvestment needs. Be mindful of debt obligations and financing covenants that could restrict distribution payments. At minimum, provide for regular partner draws (typically paid monthly or quarterly) and tax distributions (typically paid quarterly or annually). Transfer Restrictions Limiting the transferability of partnership interests maintains the identity of your partner base and ensures new partners do not enter the partnership without consensus. Note that most states require equity in professional partnerships to be held by duly licensed and actively practicing professionals, which is already a significant restriction on ownership. Consider including the following provisions in your agreement to further limit transferability: Right of First Refusal: This provision grants the partnership, and then the remaining partners, the right to purchase a departing partner's interest on the same terms and conditions as the departing partner would receive from a third-party purchaser. Tag-Along Rights: This provision grants the remaining partners the ability to sell a pro rata portion of their interests to a third-party purchaser, proportionately reducing the amount of equity the departing partner would otherwise transfer. This ensures all partners have an equal opportunity for liquidity. Lock-Up Periods: This provision imposes a complete restriction on transfers for a set period of time. Non-Compete and Non-Solicitation Clauses: These clauses prevent a departing partner from directly competing with the partnership or soliciting clients and employees for a specified period after departure. Note, however, that many jurisdictions limit or prohibit restrictive covenants on certain professionals, including lawyers and medical professionals, as a matter of public policy. Succession Planning Succession planning enables existing partners to extend their personal legacy while incentivizing the next generation for retention and commitment to the business. Succession planning can also provide an income stream to retiring partners as books of business are transferred. Your agreement should establish guidelines for transitioning both managerial control and economic value to young partners. Consider an equity structure that includes both capital equity, whereby partners share in the existing capital value of the partnership, as well as profits-based equity, which shares only in future growth. Profits interest partners can transition to capital partners over time. Define triggers for partner withdrawal in your agreement, as well as parameters for valuing a partner’s stake upon exit, including: A/R (particularly recurring revenue streams), client demographics and engagement fee structure, proprietary systems or infrastructure, and goodwill. Consider whether valuation should be discounted to reflect factors surrounding a partner’s exit (death or retirement vs. continued service with a competing business). Finally, your agreement should establish payment terms for buyout. Will departing partners require cash upfront or will they accept deferred payment? Can a buyout payment be financed using third-party loans or seller-provided financing or will the partnership require personal funds? By establishing governance procedures, addressing capital needs, creating mechanisms for cash distribution, limiting transferability and managing succession planning in your partnership agreement, you will create a legally binding framework that clearly outlines the rights and responsibilities of each partner, thereby minimizing potential disputes and ensuring partners can focus their efforts on client service to maximize revenue. *** Please contact Jillian Benda Goldberg, Esq. at jgoldberg@olenderfeldman.com, or 908-206-4214 for more information on professional partnerships.