Equity Crowdfunding: Promises & Pitfalls

When Facebook purchased Oculus VR for $2 billion, much coverage was devoted to the significant returns  the company’s venture capital backers realized. But some of Oculus’s earliest “investors”–their 9,522 Kickstarter backers–won’t see any upside at all, let alone a huge payout. Instead, these Kickstarter backers (who contributed over $2.4 million to help launch the virtual reality company) will walk away with only a t-shirt, poster, or other small tokens in recognition for their “donation” to Oculus. In fact, until now, US securities laws did not provide for the kind of crowdfunding regime that would have allowed Oculus to distribute equity in exchange for money raised through Kickstarter.

But crowdfunding rules are now on the horizon. Congress enacted the Jumpstart Our Business Startups (“JOBS”) Act in April 2012 to stimulate job creation by easing securities regulations that restricted small businesses’ ability to raise capital. The Securities Exchange Commission (“SEC”) then took more than a year and a half to promulgate the necessary regulations to implement the equity crowdfunding provisions in Section III of the JOBS Act.

Now, in the midst of the 90-day public comment period offered by the SEC, hundreds of commentators have voiced concerns about the new regulations. Experts, platform managers, investors and other professionals have submitted strong–yet contradictory–positions. The polarized calls for revision reveal the difficulty of easing the onerous restrictions on capital raising by enterpreneurs and small businesses while retaining the ability to adequately protect investors from fraud.

As the SEC continues to review these comments before issuing the final regulations, here is a list of the promises and pitfalls for both investors and entrepreneurs.

Continue reading

Q&A: Compliance with NYC’s New Earned Sick Time Act

This post is part of Priori’s  blog series “From Our Network,” where we feature lawyers in our network discussing important issues small businesses face. After every post, we give our readers a chance to ask the lawyer questions, and the lawyer picks several to answer. In today’s post, employment lawyer Deborah Karpatkin answers reader questions about NYC’s new Earned Sick Time Act. 

You say you can’t ask why someone is taking a sick day, but I had a situation where I discovered (via Facebook) that an employee who claimed to have taken a “sick day” was actually enjoying a day at the beach. When something like that happens, does it count as a sick day? How do I handle it? 

Not surprisingly, beach days don’t count as sick days.  The Earned Sick Time Act (ESTA) allows sick time to be used only for the employee’s injury or health condition, or for preventative care, or for the employee to provide care to a sick family member.

And of course, an employer can ask for documentation.  For an absence of more than three consecutive work days, an employer can ask for reasonable documentation that the sick leave was used for ESTA-compliant reasons – for example, a note signed by a licensed health care provider indicating the need for the amount of sick time taken.  And for any sick leave absence, an employer can require an employee to provide written confirmation that s/he used the sick time in accordance with the law.

An employer can’t require that the documentation specify the nature of the employee’s or the family member’s injury, illness, or condition, because that’s disclosing personal medical information.

As for what to do about your employee who took a beach day – ESTA makes clear that an employer can take disciplinary action against an employee who uses sick time for to go to the beach, or for other reasons that aren’t covered by ESTA.

Continue reading

Q&A: (Endless?) Rules for Unpaid Interns

This post is part of Priori’s  blog series “From Our Network,” where we feature lawyers in our network discussing important issues small businesses face. After every post, we give our readers a chance to ask the lawyer questions, and the lawyer picks several to answer. In today’s post, employment lawyer Evan White answers reader questions about the various rules and regulations a New York small business must follow to hire unpaid interns. 

Continue reading

From Our Network-New NYC Earned Sick Time Act: Good for Employees, Good for Business

This post is part of Priori’s blog series “From Our Network,” where we feature lawyers in our network discussing important issues small businesses face. In today’s post, employment lawyer Deborah Karpatkin gives a detailed overview about what NYC small businesses need to know about the new Earned Sick Time Act. 

If you own or work in a big company, you can skip this article.  Your company probably already has a sick leave policy. But if you own or work in a small NYC business – even as small as five or fewer employees – read on.  NYC now has a paid sick leave law, and it applies to you.

Sick leave is a quandary for small workplaces.  Employees ask, “If I’m sick, should I risk staying home?  Will I get paid? Will I lose my job?”  Employers ask, “Do I have to pay workers who are out sick?”  “Do I want sick workers to come to work?”

The new NYC Earned Sick Time Act, (“ESTA”) the first law signed by Mayor De Blasio, goes into effect next week, April 1, 2014.  It expands the coverage of an earlier version of the law, and answers these questions.

Continue reading