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On January 29, 2024, the Delaware Supreme Court issued an important decision addressing the enforceability of restrictive covenants. As detailed below, in Cantor Fitzgerald v. Ainslie, the court upheld forfeiture-for-competition provisions set forth in a limited partnership (LP) agreement and ruled in favor of the partnership not having to pay out millions to former partners.

Key highlights

In Cantor Fitzgerald, the Delaware Supreme Court decision relied significantly on the following factors in enforcing the LP agreement as written and determining that the disputed provisions were, in fact, enforceable:

  • The restrictive covenant did not bar the claimants from engaging in competitive activities.
  • Rather, the provisions in question provided, in part, that receipt and retention of prior conditional awards of a portion of their compensation would be subject to the condition precedent that the recipient refrained from competing – in other words, these were forfeiture-for-competition provisions.
  • These forfeiture-for-competition provisions were not liquidated damages provisions (triggered by a breach of contract); rather, these provisions set up a condition precedent (not competing with the employer) to the employees’ receipt of the amounts that had been held back. 
  • The “employee choice doctrine” suggests that courts do not review forfeiture-for-competition provisions for reasonableness where, as here, the employee voluntarily terminates employment (as opposed to remaining employed and vesting in the contingent compensation amounts).

Continue Reading Delaware Supreme Court confirms enforceability of restrictive covenant provisions in favor of employer-partnership, reversing Chancery Court determination

Employment legislation and litigation are often about trends. In the mid-to-late 2010’s, for instance, lawmakers across the U.S. enacted numerous bills concerning paid time off for employees, such as for sick and family leave. A more recent trend involves regulatory and legislative attempts to limit or even outright ban non-compete agreements.

In New York State, the unquestionable employment litigation trend over the past several years has revolved around frequency of pay claims under Section 191 of the New York Labor Law (NYLL). This trend was born out of a radical 2019 appellate court decision that broke from more than a century of judicial precedent.

As more fully discussed below, however, two recent developments – one legislative and one judicial – suggest that the flood of frequency of pay lawsuits may soon be a thing of the past.Continue Reading Are frequency of pay lawsuits in New York soon to be a thing of the past?

Last week, Governor Hochul announced a suite of proposed measures aimed at addressing rising maternal and infant mortality rates. As is relevant to New York employers, this includes a proposed expansion of New York State Paid Family Leave to include 40 hours of paid leave to attend prenatal medical appointments. If signed into law, this would make

New York State lawmakers had a busy 2023 and have ushered in many new measures that will take effect throughout 2024. As New York employers look toward the new year, they should keep the following key dates in mind:

  • January 1, 2024 – The minimum wage rate in New York will increase to $16/hour in New York City, Nassau, Suffolk, and Westchester Counties and $15/hour in the rest of the state. Additionally, this will cause an increase to the exempt salary threshold for administrative and executive employees — to $1,200/week or $62,400/year in New York City, Nassau, Suffolk, and Westchester Counties and $1,124.20/week or $58,458.40/year in the rest of the state.
  • February 15, 2024 – The statute of limitations for filing administrative claims of unlawful discrimination under the New York State Human Rights Law extends from one year to three years (running from the date of the alleged unlawful discriminatory practice). Claims of sexual harassment are already subject to this three-year limitations period.

Continue Reading New year, new laws: Key compliance dates for New York employers

During the height of the #MeToo movement, New York lawmakers passed a host of workplace-related legislation. This included adoption of Section 5-336 of the New York General Obligations Law, which governs the use of nondisclosure provisions in agreements resolving claims of discrimination, harassment, or retaliation. On November 17, 2023, Empire State legislators passed several key amendments (the “Amendment”) to the existing law, which took effect immediately.

By way of background, Section 5-336 was originally passed to protect nondisclosure provisions in agreements resolving claims of sexual harassment. Under Section 5-336 and prior to the Amendment, the law prohibited employers from including nondisclosure provisions in such agreements unless it was the employee’s preference and the employer complied with certain procedural requirements, including: (i) the inclusion of the provision is the employee-complainant’s preference; (ii) employee’s receipt of 21 days to consider the nondisclosure provision, a period that could not be shortened or waived (even if the employee wanted to); (iii) a 7-day revocation period; and (iv) employee’s preference for confidentiality memorialized in a separate written agreement.Continue Reading Reminder to New York employers: Amendments to nondisclosure rules will require updates to separation and settlement agreements

As detailed in part one and part two of our multipart series, artificial intelligence (AI) and generative artificial intelligence (GAI) have had a sweeping impact on the U.S. workplace. However, as we will detail in this third and final installment, there are potentially material risks and pitfalls associated with using AI and GAI to assist with various aspects of the employment relationship. We will discuss several of these below.Continue Reading How artificial intelligence is impacting the U.S. workplace (Part III)

As detailed in the first installment of our multipart series, artificial intelligence (AI) and generative artificial intelligence (GAI) have had a sweeping impact on the U.S. workplace. As we will detail in this second installment, employers have implemented AI and GAI measures to assist with various aspects of the employment relationship, from recruiting through separation of employment. While these measures have assisted employers with efficiency and streamlining of certain HR operations, as discussed below, they potentially come with some pitfalls as well.Continue Reading How artificial intelligence is impacting the U.S. workplace (Part II)

It is indisputable that artificial intelligence (AI) has generated enormous buzz over the past several years. AI has had a substantial impact on various industries and facets of society – with no signs of slowing – and its potential to disrupt longstanding business mechanisms cannot be overstated.

Among the areas most impacted by AI is the workplace.  Indeed, AI and generative artificial intelligence (GAI) are readily used – and, as will be discussed, sometimes misused – every day by millions of U.S. employees. Companies utilize these sophisticated tools for a myriad of reasons, including to boost development, increase productivity, and stay ahead of the proverbial curve.

In this multipart series, we will address a host of issues associated with the interplay between AI and GAI, on the one hand, and the U.S. workplace, on the other hand. And in this particular article, we will break down what we specifically mean when referring to AI and GAI and, also, how federal, state, and local legislatures are responding to the rise in workplace-related AI issues. Future articles will address how AI and GAI are impacting the workplace as well as challenges employers face with the adoption of AI and GAI tools in the workplace.Continue Reading How artificial intelligence is impacting the U.S. workplace (Part I)

Effective March 13, 2024, the salary threshold for certain exemptions under Article 6 of the New York Labor Law (NYLL) will increase from $900 to $1,300 per week. By way of background, Article 6 of the NYLL sets forth employer obligations with respect to pay practices in New York, many of which afford certain wage

As we previously reported here and here, effective September 17, 2023, New York State employers with four or more employees will be required to include the minimum and maximum pay range that they reasonably or in “good faith” expect to pay in any advertisement for a job, promotion, or transfer opportunity.

This disclosure