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New York’s employment landscape is undergoing sweeping changes. Recent legislation introduces new compliance challenges across nearly every facet of workplace regulation—from pay transparency to leave entitlements, wage and hour rules, employment agreements, and more.

Employers will need to revise policies, contracts, and day-to-day practices to stay compliant and avoid costly missteps. The time to act…

When a company acquires a startup, the founder often comes with the deal—bringing vision, energy, and deep product expertise. But hiring a founder post-transaction is rarely seamless, and companies should plan from deal inception for the possibility of a rocky breakup down the road. From cultural clashes to misaligned expectations, the risks of a turbulent split are real—and often overlooked amid the urgency of LOI negotiations. Below are five key employment law challenges companies face when bringing a founder into the fold—and ways to navigate the challenges before-and after-the relationship goes south.

1. Bringing the Founder on Board: Transitioning from Entrepreneur to Employee

When a company acquires a startup, retaining the founder as an employee can be a strategic necessity. Founders are frequently integral to getting the deal over the finish line. Their buy-in can make or break negotiations, and offering the founder a post-acquisition role signals respect for their vision while easing resistance. Founders bring invaluable institutional knowledge and serve as a cultural bridge, which reassures investors, helps retain key talent, and drives smooth integration and early-stage success.

However, shifting a founder from entrepreneur to employee often brings legal and operational challenges for all parties—along with psychological hurdles for founders, whose identities are deeply tied to the business.

  • Personal meets transactional: Founders may struggle to navigate the emotional weight of handing over control while also grasping the ramifications of the transaction—making it harder to align expectations with the acquirer. Even the most detailed LOI may fall short in practice, especially when working with founders who approach the deal differently than seasoned acquirers. Acquiring companies can help avoid potential issues by ensuring the founder is supported with strong legal and financial guidance, making it more likely the parties will be able to bridge any differences in priorities and move the deal forward smoothly.
  • Employment status: Founders may have previously operated as owners, consultants, or contractors, so stepping into a formal employee role can be unfamiliar, and can bring new (and sometimes unwelcome) requirements around reporting structure, accountability, and compliance. To avoid confusion by the founder-employee about their employment relationship with the company, avoid dangers of misclassification, and ensure the proper handling of tax, benefits, and compliance obligations, the acquirer should clearly explain and define the founder’s new role as an employee in employment contracts, onboarding materials, and all related HR documentation.
  • Role transition: Transitioning into a structured employee role can feel restrictive for founders: 
    • Founders are used to autonomy and broad decision-making authority and may struggle with operating in a structured corporate environment.
    • Founders often thrive in fast-moving, risk-tolerant environments where quick decisions drive progress. Transitioning to a larger organization’s more structured processes can be difficult, stymieing smooth integration.
    • The founder’s distinct vision and deep commitment to their product or company may not always align with the strategic direction of the acquiring firm, leading to hesitation by the founder around changes the acquirer seeks to implement.

To reduce the risk of founder friction during role transitioning, companies should align early on strategic goals, document all commitments clearly, and design an onboarding plan that respects the founder’s background while setting realistic expectations. Establishing clear guardrails from the outset can help to prevent misalignment and future disputes.

2. Negotiating Compensation: Motivating the Founder in Line with Company Strategy

The negotiation of compensation for a founder post-transaction is inherently complex. While acquiring companies are keen to ensure the founder remains engaged and incentivized post-transaction, the structure of compensation and benefits must also align with the acquirer’s broader compensation philosophy, governance standards, and budget limitations.

  • Equity and vesting: Founders usually want to stay engaged in the business they grew and developed. To keep founders engaged and aligned with the acquirer’s goals, companies need to offer incentives that truly resonate. A mix of rollover equity and a customized equity incentive package often does the trick, with many founders seeking stock options or restricted stock units in connection with the deal. But revisiting prior equity grants can raise sensitive issues around dilution and valuation. Navigating this terrain requires careful attention to securities laws, tax implications, and the structure of company equity plans.
  • Severance and retention: Founders may push for severance terms that go beyond market norms—especially around “good reason” and “change of control” clauses—which can trigger payouts if the founder resigns due to significant changes in role, compensation, or company ownership. While these provisions can help attract and retain top talent, companies must strike a careful balance between offering competitive incentives and preserving the company’s need for flexibility.
  • Non-standard benefits: Founders might negotiate for unique perks—like continued use of company assets, office space, or other non-cash benefits—that fall outside typical executive packages. Each request should be carefully vetted not only for legal compliance but also to ensure the perk is comparable to what other similarly situated leaders receive. Overly generous or inconsistent terms can create tension within leadership teams and raise concerns about governance.
  • Anticipating the exit: Companies should begin planning for a potential separation with the founder as early as compensation negotiations—if not sooner. Assume that if the relationship does not work out, termination will occur without cause, and recognize that such terminations typically carry significant costs in these transactions. Internally, companies should evaluate (i) whether they are comfortable with the financial obligations associated with a without-cause termination, (ii) how equity will be treated, and (iii) whether existing post-employment restrictions provide sufficient protection. Finally, document all decisions clearly to avoid misunderstandings later.

Continue Reading Putting Founders on the Payroll: 5 Post‑Acquisition Employment Law Challenges

From the groundbreaking mandate for paid prenatal leave to the upcoming requirement that employers disclose AI-related layoffs, 2025 is set to be a transformative year for New York employers. As you navigate the latest employment laws, keep this checklist close at hand. While it doesn’t cover every new regulation, it highlights the key changes our…

New York never rests–especially for employers–and 2023 was no exception. In 2023, New York employers were required to continuously pivot to meet new obligations and adhere to new limitations under freshly-enacted laws, and to closely follow landmark legislation that would significantly impact the workplace if signed. At the top of the list: S3100, a bill that would have banned employers’ use of employee noncompetes if signed (but employers can now breathe a sigh of relief, because Governor Hochul recently vetoed the bill). 2024 promises to continue to be dynamic for New York employers.

Here are ten of the most important changes New York employers need to know right now as we step into 2024–as well as what’s coming down the pike, a couple of important changes you may have missed, and what we’re keeping an eye on as we step into the new year.  

What you need to know right now

1. New York’s bill restricting noncompetes vetoed by Governor Hochul

On December 22, 2023 Governor Hochul vetoed S3100, which would have been the most restrictive state-level ban on employers’ use of noncompetes to date if it had been signed into law. Passed by the New York State Assembly in June 2023, S3100 provided that every contract restraining anyone from engaging in a lawful profession, trade or business of any kind is void to the extent of the restraint; allowed a private right of action for employees; and did not have an explicit “sale of business” exception (for more details on the now-vetoed legislation, see our prior blog here.)

The bill faced opposition by Wall Street and other industries that heavily rely on noncompetes, and business groups pushed for amendments to the bill (which the governor had until the end of 2023 to sign or veto). In late November, Governor Hochul reportedly stated she was in favor of striking a balance that would protect lower- and middle-income workers (up to $250,000) but allow noncompetes for those at higher income levels who are better equipped to negotiate on their own to do so. Reports are that Governor Hochul recently tried to negotiate amendments to the bill in this respect, but that negotiations broke down.

Employer takeaway:

  • We expect this issue to make an appearance in New York’s next legislative session. Employers should keep an eye out for the introduction of new bills to restrict noncompetes and follow their progress. Now that Governor Hochul has expressed favor for an income threshold to ban noncompetes, legislators may be more likely to craft a bill that will more easily be signed into law.

Continue Reading New York Employer “Top Ten” (and more): What to Know Heading into 2024

Heads up, New York employers. New York recently expanded its #MeToo statute to bar some of the most common terms for which employers bargain in settlement agreements involving claims of discrimination, harassment or retaliation. On November 17, 2023, Governor Hochul signed S4516 into law, amending Section 5-336 of the General Obligations Law (“GOL”) (New York’s…

New Jersey may have started a trend. As of April 10, covered New Jersey employers must now comply with new requirements under the New Jersey mini-WARN Act (see our blog here). New York and California are giving chase, with proposed amendments to New York State’s WARN Act regulations, New York State’s WARN Act, and California’s WARN Act. And New York employers should take note: New York’s WARN Portal is set to go live this month.

Proposed Amendments to NYS WARN Regulations–And a New NYS WARN Portal

The New York State Department of Labor has proposed amendments to the New York State WARN Act (“NYS WARN”) regulations that are intended to account for the post-pandemic workforce, including clarifying how remote work impacts NYS WARN compliance and simplifying language to ensure employers understand their obligations under the law. The Department of Labor is accepting comments to the proposed regulations until May 30, 2023. 

Key items in the proposed amendments to the NYS WARN regulations include:

  • Remote employees included in threshold count: The employers covered by NYS WARN has been expanded to include any employer who employs 50 or more full-time employees, who work at the single site of employment plus individuals that work remotely but are based at the employment site, which may include remote employees in New York as well as other states.
  • Certain notices must be provided electronically: Notices being sent to the New York State Department of Labor Commissioner (“Commissioner”) must be provided electronically and are no longer required to have original signatures.
  • Notice must include additional information: The notice to the Commissioner must include more detailed information about the affected employees, including telephone numbers, job titles, and whether they are paid on an hourly, salary or commission basis. The notice to affected employees must include any other information relevant to their separation, such as information related to any financial incentives an employee may receive if they remain employed by the employer until the effective date of the employment loss, as well as available dislocated worker information.
  • The exceptions for notice are changing:
    • Faltering company exception reduced: The faltering company exception will apply only to plant closings, and will no longer apply to mass layoffs, relocations or reductions in hours.
    • Unforeseeable business circumstances exception expanded: The unforeseeable business circumstances exception will be expanded to expressly include in certain circumstances a public health emergency (including a pandemic) or a terrorist attack.
    • Exception to notice requires determination by Commissioner: The 90-day notice period can be reduced in limited circumstances (including under the faltering company, unforeseeable business circumstances, and natural disaster exceptions) only if:
      • The employer submits a request for consideration for eligibility of an exception to the Commissioner within 10 business days of providing the required notice under NYS WARN to the Commissioner (unless the Commissioner grants an extension);
      • The employer provides a reason for reducing the notice period in addition to any other documents the Commissioner may require; and
      • The Commissioner determines that the employer has established all of the elements of the claimed exception.
  • The calculation of back pay is being clarified for hourly employees: The calculation to be used to determine the average rate of compensation and final rate of compensation for hourly employees is clarified. Such calculation uses the number of hours worked instead of the number of days worked. The days worked method of calculation should still be used for non-hourly employees.
  • The use of payment in lieu of notice is being clarified: Liability for an employer’s failure to give the required notice to employees under NYS WARN will be reduced by amounts paid to an employee in lieu of notice, except where the following conditions are met (then such payments will be considered wages for the notice period):
    • There is an employment agreement or uniformly applied company policy that requires the employer to give the employee a certain amount of notice before a layoff or separation;
    • The employee is laid off without the required notice; and
    • The employer pays the employee an amount equal to the employee’s wages and any benefits for the required notice period.

Continue Reading Employer WARN-ING: Potential Changes to New York’s and California’s WARN Acts Barreling Down the Turnpike

It’s been a demanding year in New York for employers. New York employers have had to continuously pivot to meet obligations under new laws and requirements in 2022, with no end in sight as we step into 2023. From New York’s new electronic monitoring law, to New York City’s salary and pay range disclosure requirements, to the newly-delayed enforcement of NYC’s automated employment decision tools law (a brief sigh of relief for employers), new laws are certain to make for a busy 2023 for New York employers. Here are 10 changes employers should know now as we get the ball rolling in 2023.

1. NYC Employers Using Automated Employment Decision Tools Now Have Until April 15, 2023 to Meet New Obligations  

The New York City Department of Consumer and Worker Protection (DCWP) granted New York City employers a happy holiday by announcing a delay of enforcement of its automated employment decision tools law (Local Law 144 of 2021) until April 15, 2023.

Until the announcement, New York City employers who use artificial intelligence in employment decision-making were faced with new requirements beginning January 1, 2023–including a prohibition against using automated employment decision tools (AEDTs) unless they took a number of specific steps prior to doing so, not the least of which would be conducting a bias audit of their AEDTs.

Proposed Rules

On December 15, 2022, DCWP published revised proposed rules for Local Law 144, making several changes to initial proposed rules published by DCWP September 23, 2022.

The initial proposed rules defined or clarified some terms (including “independent auditor,” “candidate for employment,” and “AEDT”), set forth the form and requirements of the bias audit, and provided guidance on notice requirements. 

After comments from the public on the initial proposed rules, and after a November 4, 2022 public hearing, the DCWP modified the proposed rules, with changes including:

  • Modifying the definition of AEDT (according to DCWP, “to ensure it is focused”);
  • Clarifying that an “independent auditor” may not be employed or have a financial interest in an employer or employment agency seeking to use or continue to use an AEDT, or in a vendor that developed or distributed the AEDT;
  • Revising the required calculation to be performed where an AEDT scores candidates;
  • Clarifying that the required “impact ratio” must be calculated separately to compare sex categories, race/ethnicity categories, and intersectional categories;
  • Clarifying the types of data that may be used to conduct a bias audit;
  • Clarifying that multiple employers using the same AEDT can rely upon the same bias audit as long as they provide historical data (if available) for the independent auditor to consider in such bias audit; and
  • Clarifying that an AEDT may not be used if its most recent bias audit is more than one year old.

DCWP will hold a second public hearing on the proposed rules on January 23, 2022.

For more on the law, see our recent blog Happy Holidays! Enforcement of New York City’s Automated Employment Decision Tools Law Delayed to April 15, 2023.

2. New York Employers with “No Fault” Attendance Policies Subject to Penalties for Disciplining Employees Who Take Protected Leave

Beginning February 20, 2023, New York employers with absence control policies who discipline employees for taking protected leave under any federal, state or local law will be subject to penalties.

Signed by Governor Kathy Hochul on November 21, 2022, S1958A (which amends Section 215 of the New York Labor Law (NYLL)) targets employer policies that attempt to control employee absences by assessing points or “demerits” or docking time from a leave bank when an employee is absent, regardless of whether or not the absence is permissible under applicable law. The amendment prohibits employers in New York from taking these actions when employees take a legally protected absence. Though the law does not prohibit attendance policies that include a penalty point system, legally protected absences cannot be used to deduct from these point systems.

Employers are prohibited from retaliating or discriminating against any employee that makes a complaint that the employer violated the law, and violations can come with sizable penalties. In addition to enforcement by the New York State Department of Labor (NYSDOL), NYLL Section 215 provides a private cause of action for current and former employees to recover monetary damages from employers who have violated Section 215. Monetary damages include back pay, liquidated damages and attorneys’ fees in addition to civil penalties that can be issued by NYSDOL of up to $10,000 for the first violation and $20,000 for repeat violations.

Employer Takeaways

  • Employers who currently have policies that assess points or demerits against employees for taking absences under applicable law should review and update the policies to be compliant with the law.
  • Employers should train HR professionals, managers and supervisors on the new law.

3. Employers Must Provide Pay Ranges in Job Postings under New York City Pay Transparency Law Now–and under New York State Pay Transparency Law Beginning September 17, 2023

New York City employers are already feeling the impact of having to meet the requirements of New York City’s new pay transparency law (Local Law 32 and its amendment), which went into effect on November 1, 2022. Now, employers all across New York State will also have to comply with salary transparency requirements. Governor Hochul signed New York State’s salary transparency bill (S9427A) into law on December 21, 2022. Employers should begin to prepare now for the law’s September 17, 2023 effective date.

Covered employers

New York City’s law requires New York City employers with four or more employees (with at least one working in New York City) to disclose salary and hourly ranges in any advertisements for jobs, promotions, or transfer opportunities. (See our prior blogs here and here–and for a deeper look at salary and pay range disclosure requirements in job postings across the US, watch our video Employers: All Eyes on Salary and Pay Range Disclosure in US Job Postings).

Similar to New York City’s law, New York State’s law also requires employers with four or more employees to include a compensation range in all advertisements for new jobs, promotions and transfer opportunities. It’s not clear at this time whether all four employees must be employed within New York State, or whether an employer is covered even if employees are located elsewhere. The New York Department of Labor (NYDOL) is authorized to promulgate regulations to clarify the law, and it is anticipated that guidance will be issued before the law’s effective date.

Employment agencies and recruiters–but not temporary employment agencies–are also covered by each law.

Continue Reading Top 10 New York Employment Law Updates: Closing Out 2022 and Heading Into 2023

Last week, New York City employers received more clarification on New York City’s new salary disclosure law (Local Law 32 for 2022, the “Salary Disclosure Law,” which we previously blogged about here). The New York City Commission on Human Rights (NYCCHR) released a Fact Sheet providing more details on employers’ obligations under…

On December 15, New York City released guidance on the new private sector COVID-19 vaccine mandate set to take effect on December 27. The new order is the strictest in that nation and comes amid omicron’s emergence, delta’s severity and the holiday season. Below, we provide answers to the key questions NYC employers may have to ensure compliance with the mandate.

Which NYC employers are covered by the mandate?

The mandate applies to any non-governmental entity that employs more than one person in NYC or maintains or operates a workplace in NYC (a Covered Entity), regardless of its industry. “Workplace” is defined as any place where work is performed in the presence of another worker or a member of the public, including vehicles. Self-employed individuals and sole proprietors are not covered by the mandate unless they work at a NYC workplace or interact in person with other workers or members of the public as part of their job duties.

What workers are covered?

Employers must collect proof of vaccination from all full- or part-time employees, interns, volunteers, or contractors. The mandate includes exemptions for those who:

  1.  Work remotely full-time
  2. Only enter the workplace for a quick and limited purpose,
  3. Are performing artists or athletes who are not required to be vaccinated per the Key to NYC program, or
  4. Are granted a reasonable accommodation based on their religion or medical condition.

Purposes characterized as “quick and limited” include using the bathroom, making a delivery, or receiving an assignment before leaving to begin a solitary assignment.Continue Reading NYC Mandates the Jab for Private Employers | What Employers Need to Know About the Detailed Guidance Unveiled December 15

This year New York employers have had to scramble to keep up with many new employment laws, and next year promises more of the same. The latest: New York City Mayor Bill de Blasio’s December 6 mandate that private sector employers require COVID-19 vaccines for their workers in NYC. If it survives expected legal challenges and takes effect December 27 (Happy Holidays!), the rule will be the broadest mandate of any state or large city in the US. From minimum wage increases, to regulations on the use of artificial intelligence tools in employee recruitment, to notice requirements for electronic employee monitoring, to New York’s fulsome response to COVID-19 through the HERO Act—private sector employers in New York have a laundry list of changes to implement and prepare for.

Below we highlight the 10 major employment law changes and updates that businesses need to know.

  1. New York City Vaccine Mandate To Hit All Private Employers December 27

By the end of the month, all in-person private sector New York City employees must have at least one dose of a COVID-19 vaccine, according to an announcement by Mayor de Blasio. The mandate, which will take the form of an order issued by the NYC Department of Health and Mental Hygiene, will apply to nearly 184,000 businesses and will not be limited to businesses in certain industries or based on company size. The mandate will most likely parallel the city worker mandate in that employers will, in certain instances, be permitted to make reasonable accommodations to mandatory vaccination policies for employees with legitimate religious or medical reasons, but will not permit any testing options in lieu of the vaccine. The mandate will not apply to fully remote employees or those who are alone at a worksite. The city has not yet announced whether employers will face inspections or fines if they fail to follow the mandate, but it intends to release implementation and enforcement guidelines by December 15, 2021.

The new mandate is the first of its kind on a local level while the federal vaccine rule for private employers with 100 or more employees remains on pause amid several legal challenges. The city mandate is also set to go into effect only days before the New York City mayoral transition, leaving future enforcement of the mandate uncertain.

 Employer Takeaways

  • Stay abreast of further city announcements concerning additional guidance on the vaccine mandate.
  • Operate under the assumption that the vaccine mandate will take effect December 27, 2021, and notify employees of the new mandate so unvaccinated employees have sufficient time to get vaccinated.
  • Implement procedures to verify applicable in-person employees vaccination status and prepare to collect vaccination records as confidential medical information.
  • Prepare to establish a mandatory vaccination policy and a process for employees to request exemptions, to the extent your business has not already done so.
  • Begin considering operational contingency plans if your business expects that a significant portion of the workforce will not get vaccinated.

Continue Reading Top 10 New York Employment Law Updates For 2021/2022