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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?

As we have previously reported, several months ago, New York enacted the HERO Act, a sweeping overhaul of the state’s workplace health and safety laws.  On September 6, 2021, the New York State Commissioner of Health designated COVID-19 as an airborne infectious disease under the HERO Act. As such, all New York employers are

Please see an updated version of our FAQs as of July 25, 2020. 

 We have compiled FAQs concerning New York’s COVID-19-related health and safety protocols for businesses across the state. These protocols apply to all New York businesses – regardless of size, location, whether the business has physically reopened, or whether it was deemed “essential”

Since early May, New York State has published – across multiple platforms – a slew of materials related to business reopenings and workplace-related health and safety. We developed a FAQs based on some of the more common New York-specific questions that clients have posed to us since May. The FAQs touch on a host of

As we have reported, since March, New York State has implemented a variety of measures to limit the spread of COVID-19 and to protect workers during the pandemic. These measures include essential business designations, limiting in-person work, paid leave for certain employees impacted by COVID-19, phased reopening of nonessential businesses, mandatory health and safety protocols, and requiring a business reopening safety plan. The New York State Department of Labor (NYSDOL) is charged with enforcing many of these measures with which all New York businesses have been and are required to comply.

With many regions now in “Phase Three” of the state’s reopening scheme, the NYSDOL will likely begin auditing employers and investigating complaints to ensure that businesses are complying with New York’s many COVID-19 regulations. For example, the NYSDOL may request from employers an explanation or documentation of the health and safety measures in place at their in-person places of business. In addition, the NYSDOL may inquire as to whether employees have contracted COVID-19 and, if so, what protocols businesses implemented as a result.
Continue Reading Reminder to New York employers: the New York State Department of Labor will be enforcing COVID-19 regulations

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed on March 27, 2020, authorizing more than $2 trillion to battle COVID-19 and its economic effects on the U.S. economy. For U.S. employers, the CARES Act provides significant support in the form of loans for small businesses, a loan forgiveness program to encourage employers to retain their workforces during this difficult time, and expanded unemployment benefits applying in most cases to terminated employees, furloughed employees, and those given reduced hours. It also significantly expands the definition of who can receive unemployment benefits to include self-employed workers in the gig economy, independent contractors, and those who may not have an expanded work history.

Although a more fulsome discussion of the contents of the CARES Act can be found here, the purpose of this blog is to discuss certain provisions of the CARES Act on a high level and to identify concerns that employers may face in making the decision to furlough or reduce their workforce.Continue Reading To RIF, or Not to RIF: How federal loans can help small and mid-size businesses under the CARES Act

New York state employers, it’s time to dust off and update your employee handbooks again.  Earlier this month, Governor Andrew Cuomo signed a law that protects employees against discrimination on the basis of their reproductive health decision-making. The law, which mirrors a recent bill passed by New York City lawmakers, also requires that employers in

New York City’s Human Rights Law (NYCHRL) is one of the broadest anti-discrimination statutes in the country. But does it apply to all Big Apple employers, regardless of size? A recent amendment passed by the City Council clarifies precisely which entities are considered “employers” for purposes of the NYCHRL.

In its current incarnation, the NYCHRL simply states that it does not apply to any employer with fewer than four persons in its employ. This definition has been subject to debate, however, due to the statute’s broad definition of employee, which currently encompasses employees that are full- or part-time, permanent or temporary, paid on or off the books, or are paid or unpaid interns. However, the amended law expands these protections to (1) independent contractors, (2) freelancers and (3) an employer’s parent, spouse, domestic partner or child, if employed by the employer.Continue Reading NYC Council amends the New York City Human Rights Law definition of covered employer

For decades, the New York City Human Rights Law (NYCHRL) has provided protections against discrimination, harassment, and retaliation on the basis of an individual’s actual or perceived immigration status or national origin. However, last week, New York City’s Commission on Human Rights (NYCCHR) issued new guidance (the Guidance) that greatly expands the basis on which an employer can be penalized under the law. The Guidance provides examples to illustrate prohibited harassment and retaliation against individuals, based on their immigration status or national origin. Below is a list of the hiring practices and employee policies which can often lead employers to inadvertently violate the NYCHRL.
Continue Reading New York City’s Commission on Human Rights issues new guidance on immigration status and national origin discrimination