In early February 2026, the Trump administration announced that the U.S. Environmental Protection Agency (EPA) is moving forward with a final rule rescinding the agency’s 2009 “endangerment finding” for greenhouse gases. This development represents a significant escalation beyond earlier indications that the EPA was considering such a step and marks one of the most consequential shifts in federal environmental regulatory policy in decades. While the proposal will almost certainly be challenged in court and may not take effect for some time, the announcement has immediate implications for businesses, developers, and state and local governments that rely on federal climate regulatory frameworks. This update explains what the recent announcement means, how it fits into the broader legal landscape, and what stakeholders should be preparing for. What Has Changed Since EPA’s Draft Rule Submission As described in our prior article , the EPA submitted a draft final rule to rescind the greenhouse gas endangerment finding for executive review. The administration has now publicly confirmed that it intends to finalize that rule, framing the action as a major deregulatory step that would fundamentally alter federal climate policy under the Clean Air Act. The 2009 endangerment finding concluded that emissions of six greenhouse gases, including carbon dioxide and methane, “cause or contribute” to air pollution that endangers public health and welfare. That determination has served as the legal foundation for federal regulation of greenhouse gas emissions from vehicles and other sources for more than 15 years. The new rule would withdraw that determination, which in turn would undermine the statutory trigger that authorizes or requires the EPA to regulate greenhouse gases under several Clean Air Act programs. Litigation challenging the rescission is widely expected and could ultimately reach the Supreme Court. Key Legal Issues Raised by the Rescission 1. Interaction with Massachusetts v. EPA and Clean Air Act Obligations The endangerment finding was the EPA’s response to the Supreme Court’s 2007 decision in Massachusetts v. EPA , which held that greenhouse gases are “air pollutants” under the Clean Air Act and that the EPA must determine whether they endanger public health or welfare. The current proposal does not repeal that Supreme Court decision or amend the Clean Air Act. Instead, it represents a new agency interpretation of whether greenhouse gases meet the statutory “endangerment” threshold. That distinction will be central in litigation, as courts will assess whether the EPA’s new interpretation is consistent with the statute and administrative law principles governing agency reversals of prior scientific determinations. 2. Administrative Law and Scientific Record Challenges A core legal question will be whether the EPA has provided a sufficient scientific and administrative record to justify reversing a long-standing scientific determination that has been reaffirmed multiple times by courts and prior administrations. Under administrative law doctrines, agencies may change policy positions, but they must provide a reasoned explanation and address reliance interests. Opponents of the rescission are likely to argue that the EPA has failed to adequately justify departing from a substantial body of scientific evidence and precedent. 3. Federalism and State Authority The rescission does not eliminate state authority to regulate greenhouse gas emissions. States such as New York regulate greenhouse gases under state statutes and regulations independent of the federal endangerment finding. However, a divergence between federal and state frameworks could raise complex federalism and preemption questions, particularly in sectors where federal standards historically served as a baseline. Implications for Businesses and Developers Regulatory Uncertainty and Compliance Planning For regulated industries, such as energy, manufacturing, transportation, and large-scale development, the most immediate impact is regulatory uncertainty. Existing federal rules remain in effect unless revised or invalidated, but their legal footing may become less stable. Companies that have invested in compliance strategies, emissions controls, or decarbonization initiatives may face shifting federal requirements while still navigating state and international climate obligations. Investors and lenders often view regulatory volatility as a risk factor, which can affect financing terms, project timelines, and corporate disclosures. Potential for Increased Litigation Risk Paradoxically, reducing federal regulation could increase litigation exposure. A unified federal regulatory framework can preempt certain tort and nuisance claims. If federal authority is curtailed, plaintiffs may test state law or common law theories, potentially increasing litigation risk for certain sectors. Global and Market Pressures Even if federal regulatory obligations are relaxed in the United States, multinational companies will still face climate-related regulatory and disclosure requirements in other jurisdictions, including the European Union and international financial markets. Market-driven climate risk management is therefore likely to persist irrespective of federal policy changes. Implications for Municipalities and Local Governments State and Local Regulatory Programs Continue The rescission does not affect state environmental laws, such as New York’s Climate Leadership and Community Protection Act (CLCPA), state environmental review requirements, or local land use authority. Municipalities will continue to review energy, infrastructure, and development projects under state and local frameworks. Land Use, Infrastructure, and Planning Considerations Municipalities may see increased divergence between federal and state permitting frameworks, particularly for energy and industrial projects. Local governments should anticipate questions about how federal policy shifts affect: Environmental review under state law Comprehensive planning and zoning for energy facilities Infrastructure financing and risk allocation Long-term climate resilience planning Intergovernmental Coordination Challenges Differences between federal and state regulatory approaches may complicate coordination on infrastructure, transportation, and environmental permitting. Municipalities may need to reassess intergovernmental agreements and compliance strategies in light of evolving federal standards. What to Expect Next Rule Finalization and Immediate Litigation Once the final rule is published in the Federal Register, legal challenges are expected from states, environmental organizations, and industry stakeholders. Courts will likely issue preliminary rulings on stays and injunctions, which could determine whether the rescission takes effect while litigation proceeds. Potential Supreme Court Review Given the significance of the endangerment finding to federal climate regulation, the dispute is likely to reach the Supreme Court. The outcome could reshape administrative law, environmental regulation, and the scope of agency authority under the Clean Air Act. Ongoing Policy and Legislative Responses Congress retains authority to amend the Clean Air Act to explicitly address greenhouse gas regulation, although legislative action is uncertain. States may also expand or modify their own climate regulatory frameworks in response to federal changes. Conclusion The EPA’s move to rescind the greenhouse gas endangerment finding represents a structural shift in federal environmental law rather than a routine regulatory adjustment. While the ultimate legal outcome is uncertain and likely years away, the announcement has immediate implications for regulatory planning, risk management, and intergovernmental coordination. Businesses, developers, and municipalities should monitor the rulemaking process, litigation developments, and state regulatory responses. In the interim, compliance strategies should account for continued state and international climate obligations, evolving litigation risk, and the possibility of further changes in federal policy. If you have questions, need assistance, or are seeking guidance with an Environmental , Land Use & Zoning , or Municipal Law matter, please contact Jacob H. Zoghlin  at 585-258-2834 or jzoghlin@underbergkessler.com .

We are pleased to announce that our Buffalo office has relocated to the Avant Building, ideally situated in the heart of the city’s Central Business District. Our new office is located on the 11th floor, Suite 1160, at 200 Delaware Avenue, at the corner of Delaware Avenue and West Huron Street. Clients visiting our new location are welcome to take advantage of the building’s convenient on-site valet parking, with additional public parking options available within walking distance. Please note that our contact information remains unchanged: phone (716) 848-9000, fax (716) 847-6004, and info@underbergkessler.com .

Congratulations to David M. Tang  who has been elected to serve on the Board of Trustees of America’s Public Television Stations (APTS). His term begins on March 2, 2026. APTS  is a nonprofit membership organization ensuring a strong and financially sound public television system and helping member stations provide essential public services in education, public safety and community connections to their local areas and the American people. David is a Partner at Underberg & Kessler LLP and serves as Chair of the firm's Health Care  and Creditors' Rights  practice groups. He advises health care providers, commercial lenders, nonprofits, and business clients on restructuring, governance, risk management, and complex litigation matters. David has served in leadership roles on the boards of several nonprofit organizations, including WXXI Public Broadcasting Council, The Little Theatre, St. John’s Foundation, the Center for Dispute Settlement, and Providence Housing Development Corporation. He is a member of the American, New York State (NYSBA), and Monroe County Bar Associations (MCBA) and a former MCBA Trustee, past Chair of the MCBA Membership Committee and past Chair of the MCBA Diversity Committee. He currently serves on the Executive Committee of NYSBA’s General Practice Section. David is a Fellow of the American Bar Foundation and a recipient of the NYSBA Trial Lawyers Section’s 2023 Justice Ruth Bader Ginsburg Vanguard Award, which recognizes a trial attorney whose leadership advances fairness, inclusivity, and equity in the legal system. David is recognized by Best Lawyers in America ® for his work in Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law, Health Care Law, Litigation-Banking and Finance, and Litigation-Health Care and he has been selected as an Upstate New York Super Lawyers honoree every year since 2021. David earned his B.A. from Cornell University and his J.D. from Syracuse University College of Law, where he served as Managing Editor of the Syracuse Law Review.

We are pleased to announce that Jacob H. Zoghlin has been selected to serve as Co-Chair on the Enforcement & Compliance Committee of the New York State Bar Association’s (NYSBA) Environmental & Energy Law Section. In this role, Jacob will help to lead the Committee’s efforts to provide education, training, and thought leadership on environmental, energy, and related regulatory enforcement and compliance issues. The Committee closely monitors and analyzes significant developments in state and federal statutes and regulations, agency guidance and policies, judicial and administrative decisions, and emerging enforcement trends. Jacob serves as Chair of Underberg & Kessler’s Environmental Law  and Municipal Law  practice groups and is a Partner in the firm’s Cannabis Law , Litigation  and Real Estate & Finance  practice groups. He counsels individuals, businesses, citizens’ groups, and municipalities on diverse environmental, land use, zoning, cannabis, energy, and municipal law matters. Jacob is an active member of the NYSBA and the Monroe County Bar Association and writes regularly on a variety of legal issues. Within the NYSBA, he is a member of the Environmental & Energy Law Section, the Local & State Government Law Section, and the Cannabis Law Section. In the Cannabis Law Section, Jacob serves on the Executive Committee and has chaired the Local Government Committee since 2022. He is also a member of NAIOP, the Commercial Real Estate Developers Association, through its Upstate New York Chapter. He is a former member of the Board of Directors of Flower City Arts Center and a former Attorney Observer to the Board of Directors of the Senior Law Center. Jacob has received the Super Lawyers Rising Star Award every year since 2020 and was recognized by Best Lawyers: Ones to Watch in America  in the 2024 and 2025 editions for his work in Environmental Law and Land Use & Zoning Law. Jacob was recently named to the  Rochester Business Journal’s  2025 Power List for Environmental Leaders and in 2021 he received the Up and Coming Lawyers award in The Daily Record  and Rochester Business Journal’s  Legal Excellence Awards program. Jacob graduated with a B.A. from Haverford College and earned his J.D., cum laude , from American University Washington College of Law.

As we earlier reported , on December 19, 2025, New York enacted the Trapped at Work Act (the “Act”), broadly restricting employer use of training repayment and “stay-or-pay” agreements. As originally drafted, the law created significant uncertainty for employers by covering not only employees, but also independent contractors, interns, volunteers, and other service providers, and by potentially invalidating many common tuition reimbursement and incentive programs. This week, the New York State Legislature adopted significant amendments that narrow and clarify the law while providing meaningful relief for employers. The amendments are anticipated to be signed by Governor Hochul. Importantly, the Act now applies only to employees, not independent contractors or other non-employee workers. This substantially reduces the law’s scope. Employers still may not require, as a condition of employment, that an employee sign an agreement requiring payment if they leave before a set time. Such provisions remain unenforceable. However, the amendments create a clear path for lawful education repayment agreements. Employers may seek reimbursement for transferable, industry-recognized credentials (e.g., degrees, licenses, certifications that “enhance the employee’s employability with other employers”), but not for: Employer-specific training, such as instruction regarding internal policies, systems, or processes; and Proprietary systems, or Mandatory safety compliance training (such as OSHA, sexual harassment prevention, or diversity training). To be enforceable, agreements must: Be in a separate written contract; Not require the employee to obtain transferable credentials as a condition of employment; Specify a predetermined, prorated repayment amount that does not exceed actual costs to the employer; Provide prorated repayment; and Waive repayment if the employee is terminated (except for misconduct). The law continues to allow recovery of voluntary property purchases, certain bonuses or relocation assistance, sabbatical commitments, and collectively bargained arrangements. Further, unlike the initial legislation that was effective immediately, the Act now takes effect one year after enactment (December 19, 2026), giving employers time to revise policies and agreements. What Employers Should Do Now Although the amendments tighten the Act’s scope and clarify key requirements, they impose specific conditions that may affect existing agreements and standard onboarding practices. Employers should take advantage of the delayed effective date to review how training and repayment arrangements are structured and to ensure they align with the amended statutory framework. We recommend employers: Audit training and repayment agreements, Separate tuition agreements from offer letters, Add prorated and termination protections, and Remove broad “stay-or-pay” or mandatory repayment language tied to ordinary onboarding or internal training. Bottom line, the amendments significantly narrow the Act and restore flexibility for legitimate tuition and incentive programs, but only if agreements are carefully structured. Proactive review now will help ensure compliance before the law takes effect. Employers should consult experienced labor and employment counsel to assess the impact of the Act and to assist in crafting legally compliant policies. If you have any questions regarding this article or any Labor or Employment law  issue, please contact Ryan T. Biesenbach  at (585) 258-2865 or rbiesenbach@underbergkessler.com .

In early January 2026, the U.S. Environmental Protection Agency (EPA) submitted a draft final rule to the Trump administration for review that would repeal what is commonly known as the “endangerment finding” for greenhouse gases under the federal Clean Air Act. While the rule is not yet final, the submission marks a significant legal development with broad implications for environmental regulation, industry, and state and local governments, including New York. To understand why this action is noteworthy, it is necessary to understand what the endangerment finding is, how it has functioned for more than a decade, and how the proposed repeal would alter the legal landscape. What Is the Endangerment Finding? The endangerment finding is a formal determination by the EPA that certain air pollutants “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.” In 2009, the EPA concluded that six greenhouse gases—including carbon dioxide and methane—met this standard. That determination did not, by itself, impose emission limits. Instead, it served as the legal foundation that allowed the EPA to regulate greenhouse gas emissions from vehicles, power plants, and certain industrial sources under existing provisions of the Clean Air Act. The legal basis for the finding traces back to a landmark Supreme Court decision in 2007, Massachusetts v. EPA , which held that greenhouse gases qualify as “air pollutants” under the Act and that EPA must determine whether they endanger public health or welfare. The 2009 finding was the agency’s response to that mandate. Since then, the endangerment finding has served as the cornerstone for federal climate-related air regulations. What the Draft Final Rule Proposes to Do The draft final rule proposes to rescind the greenhouse gas endangerment finding entirely. In practical terms, this would remove the EPA’s determination that greenhouse gas emissions endanger public health and welfare for purposes of the Clean Air Act. Unlike prior regulatory actions, which often adjusted emission standards, compliance timelines, or sector-specific requirements, this proposal targets the underlying legal predicate itself. If finalized, it would mean that the EPA no longer has an active endangerment determination supporting greenhouse gas regulation under key Clean Air Act programs. It is important to note that the rule is described as a “draft final” rule. Before it can take effect, it must complete Trump administration review and then be formally issued. Litigation is widely expected, but the proposal itself already has immediate legal and planning implications. How This Differs from Past EPA Climate Rules Most prior federal climate actions under the Clean Air Act accepted the endangerment finding as settled law. Regulatory debates tended to focus on questions such as: How stringent emission limits should be; Which sources should be regulated; How compliance costs should be calculated; and/or How federal rules interact with state programs. Even when administrations changed, they generally sought to revise or replace specific regulations rather than revoke the endangerment finding itself. This proposal is different in terms of both scope and strategy. By rescinding the endangerment finding, the EPA would effectively remove the statutory trigger that requires or authorizes greenhouse gas regulation under multiple Clean Air Act provisions. In that sense, the rule is structural rather than incremental. Legal Consequences Under the Clean Air Act If the endangerment finding is repealed and upheld, EPA’s authority to regulate greenhouse gases under certain sections of the Clean Air Act would be significantly constrained. Regulations tied directly to that finding could be weakened, suspended, or rendered legally vulnerable. However, this does not repeal the Clean Air Act itself, nor does it amend the statute. Congress would need to act to change the law. Instead, the proposal reflects a reinterpretation of how existing statutory terms, particularly “endangerment,” are applied to greenhouse gases. The legal question is not whether climate change exists, but whether greenhouse gas emissions meet the statutory threshold that triggers Clean Air Act regulation. That distinction is likely to be central in any future court challenges. Impacts on Industry and Development For regulated industries, the proposal introduces both short-term uncertainty and potential long-term change. Industries that have been subject to federal greenhouse gas permitting or emission standards—such as power generation, manufacturing, and large-scale development—may see changes in federal compliance obligations if the rule takes effect. However, the immediate effect is not deregulation across the board; existing rules remain in place unless and until they are revised or invalidated. Developers and infrastructure sponsors should be aware that regulatory uncertainty can affect project timelines, financing, and permitting strategies. Lenders and investors often rely on stable regulatory assumptions; and so, shifts at the federal level can prompt closer scrutiny of risk allocation. The Role of States Like New York The proposed repeal does not eliminate state-level climate authority. New York, for example, regulates greenhouse gas emissions under state statutes and regulations that are independent of the federal endangerment finding. State environmental review, permitting, and climate laws would continue to apply regardless of federal action. However, differences between federal and state regulatory approaches could widen. This raises questions about coordination, preemption, and the extent to which states may fill regulatory gaps left at the federal level. For municipalities, the change may influence how local land use approvals, environmental reviews, and infrastructure planning are framed, particularly for energy, transportation, and industrial projects. Why the Proposal Matters Now The submission of the draft final rule signals that the EPA is moving beyond conceptual debate toward concrete legal change. Whether or not the rule ultimately survives judicial review, it marks a turning point in how the federal government approaches greenhouse gas regulation under the Clean Air Act. For the public, the proposal underscores that environmental regulation often turns on statutory interpretation and administrative process, not just policy preferences. For regulated entities and local governments, it reinforces the importance of monitoring federal actions that can reshape the legal framework governing development and environmental compliance. As the rule proceeds through final review and likely litigation, its outcome will shape the next chapter of federal environmental law, with ripple effects reaching well beyond Washington, DC. Jacob H. Zoghlin  is a Partner in Underberg & Kessler LLP’s Litigation  department and chairs the firm’s Environmental Law  and Municipal Law  practice groups. He focuses his practice in the areas of environmental law, municipal law, development law, energy law, zoning and land use law, cannabis law, Article 78 proceedings, and related litigation. He can be reached at jzoghlin@underbergkessler.com  or 585-258-2834. Reprinted with permission from The Daily Record and available as a PDF file here .

On July 25, 2023, the United States Citizenship and Immigration Services (“USCIS”) published a notice to inform the public that the Employment Eligibility Verification Form (“Form I-9”), has been updated. Employers are encouraged to familiarize themselves with the updated form and the methods available for completing the new Form I-9, including the E-Verify option. As such, this post is intended to summarize some of those updates and alert employers about the approaching Form I-9-related deadlines. General Background Between March and September of 2022, USCIS and the Department of Homeland Security (“DHS”) ran congruent efforts to gauge the public’s perspective on proposed changes to the Form I-9 and related review procedures (see our post from early 2022 that highlights some of the proposed changes here ). USCIS published two information collection notices and reviewed and responded to hundreds of comments between the two information collection notices. DHS issued a Notice of Proposed Rulemaking and sought comments on an optional alternative to the required in-person physical document examination method. DHS has since published the Final Rule, which is available in the Federal Register . Form I-9 Amendments Amendments have been implemented for both Form I-9 and its correlating instructions. The goal of the amendments is to reduce employers’ and employees’ respective burdens when completing the form. Some of the major changes to Form I-9 are listed below: Section 1 and Section 2 have been reduced to one, shared, single-sided sheet. Section 3 has been moved to a separate supplement form, Supplement B. Form I-9 can now be filled out on tablets and mobile devices. A box has been added to indicate that an employee’s Form I-9 documentation was examined via a DHS-authorized alternative procedure instead of via physical examination. To correlate with the Form I-9 amendments, the instructions were also revised. Some of these changes include shortening the length of the instructions from fifteen (15) pages to eight (8) pages and adding a section on how employers are to utilize the new checkbox for alternative Form I-9 review procedures. The Final Rule: Alternative Review Procedure In conjunction with the new Form I-9, DHS, in partnership with the Social Security Administration (“SSA”), has modernized employment eligibility verification, taking steps to offer certainty and flexibility to American businesses considering the realities of post-COVID work cultures where remote employment has become increasingly prevalent. E-Verify is a free, flexible, and electronic option for employment eligibility verification that advances DHS’s mission of safeguarding the integrity of the employment eligibility verification process. Employers should not be intimidated by this process as DHS has ensured employers have access to information about this program. The E-Verify website provides information and resources, including webinars, to employers about the alternative verification method, E-Verify qualifications, and the enrollment process. Under the current requirements, employers are required to conduct a physical examination of Form I-9 documentation within three business days after the first day of employment of a new hire. Employers who enroll with E-Verify will have the option to complete the review process via either physical or remote examination. Employers that do not qualify for the E-Verify program must perform all required physical examinations of identity and employment authorization documents for those employees hired after March 20, 2020, and for those employees who have received only a virtual or remote examination under the temporary COVID-19 accommodations. Noteworthy Dates As a reminder, the temporary COVID-19 accommodations permitting remote review of employee identification and employment authorization documents ends today, July 31, 2023 (see our prior post on the topic here ). Employers who elect not to enroll in, or who do not qualify for, the E-Verify program have until August 30, 2023 to become compliant with Form I-9 physical examination requirements. Starting August 1, 2023, employers can download or purchase the paper versions of the updated Form I-9 from USCIS’s website. Like the current Form I-9, a Spanish language version of the new Form I-9 will also be available on USCIS’s website. The current version of the Form I-9 continues to be effective through October 31, 2023. As such, starting November 1, 2023, the current version of Form I-9 will be discontinued and invalid. Employers that are working to gain compliance by the August 30, 2023 deadline should be careful to avoid unnecessary verification for current employees with a properly completed Form I-9 on file. Unnecessary verifications could result in a violation of the anti-discrimination provision of the Immigration and Nationality Act.

Merchant Cash Advances (“MCA”), which spawned from the 2008 financial crisis, offer an alternative method of short-term financing for cash-strapped small businesses who need a quick source of funds and may not qualify for a bank loan. MCA companies provide funds to struggling businesses in exchange for a percentage of the businesses’ revenue, which typically are repaid through daily or weekly automatic withdrawals from the business’s bank accounts. Frequently referred to as payday lenders for businesses, MCA companies tend to use high pressure sales tactics to entice unsuspecting small business owners into signing contracts that can be the gateway to financial ruin. These contracts of adhesion contain one-sided terms in favor of the lender, default provisions that are so restrictive a business is certain to default before ever contemplating the protections of bankruptcy laws, broad security pledges that encumber every asset and potential revenue stream, allow the lender unfettered access to the borrower’s bank accounts to monitor the financial condition of the borrower, and include mandatory personal guarantees of both performance and payment that can be invoked at any time. MCA companies employ a network of independent sales organizations (“ISOs”) who use leads purchased from online paid lead generators whose websites promise to match the consumer with reputable lenders along with website inquiries. The ISOs receive a commission or referral fee paid by the borrower from the funding proceeds. The MCA agreements mimic a traditional factoring transaction, but the reality is quite different. Factoring is a type of small business financing where a factoring company purchases accounts receivable at a discount from the invoice amount. In return for the right to collect on the invoice and retain the difference between the invoice amount and the discounted purchase price, the factoring company assumes the credit risk of the collectability of the accounts. As owner of the account, the factoring company is typically entitled to receive payment directly from the account debtor, and to undertake collection activities. In contrast, a loan is the exchange of a sum certain to a business, with a promise to repay the sum plus a rate of interest, presumably from the future operating revenues of the business. The lender does not assume the credit risk of any particular account or asset of the business and does not assume responsibility for the collection of any account. In New York, interest rates are capped at 25% and any lender who charges more than the statutory maximum will run afoul of the state’s usuary laws. Although MCA agreements state that they purchase accounts receivable and display a percentage rate that is at or below the statutory maximum, the effective rate of interest is significantly higher. The agreements do not identify any particular account purchased and require payments on a set daily or weekly schedule. Despite reconciliation provisions in the agreements that purportedly require the lenders to adjust the payments at the request of the borrower, the lenders rarely disclose how the payments are determined or under what circumstances a borrower would be entitled to an adjustment. In many cases, these lenders don’t have a reconciliation department and recent court cases have shown that certain lenders never intended to make the adjustments. With sham provisions and virtually no likelihood of adjustment, the agreements bear the hallmarks of a loan transaction: certainty of payment and a finite term. The characterization and type of the MCA transaction is critical and continues to be the subject of consternation of the New York Courts and the Bankruptcy Courts. MCA companies have a strong interest in ensuring that the agreements are interpreted as a sale of receivables and not a loan. If the agreements are said to be a loan, then the effective interest rates on the agreements, which can exceed 300% on an annualized basis, would exceed both civil and criminal usury laws and expose the lenders to the risk of criminal enterprise corruption statutes. Courts have struggled to develop any test that will uncover the true nature of MCA transactions. Civil Courts have defaulted to a three-prong test that does little to consider the overarching purpose and character of the agreements. Bankruptcy Courts fair slightly better, having developed a more fact intensive inquiry, however even that falls short of full discovery of the true nature of the predatory lending scheme. The terms and conditions of these MCA agreements are intentionally designed and/or used by the MCA companies to try to deceive courts and law enforcement into believing the agreements do not contemplate a loan transaction and thus do not trigger the usury or racketeering laws. A central component of the scheme includes pushing cash poor businesses to the point that they cannot meet their obligations under existing MCA agreements, at which point the lender offers new advances with even more onerous terms, trapping their victims into a negative feedback loop before pushing businesses (and their individual owners) towards a financial cliff. Eventually, the terms become too oppressive, small businesses default, and the MCA companies aggressively pursue small businesses and their individual owners for repayment of the amounts due under the loans. MCA companies often employ threatening, deceptive, and illegal collection tactics, impose unconscionable fees, file lawsuits in New York against businesses out of state, use unreliable methods of service designed to ensure defendants fail to answer, which then allow the MCA lenders to file uncontested default judgments. For nearly a decade, MCA companies have operated with impunity, unregulated and undeterred, compiling over tens of thousands of judgments against small businesses and their individual owners. In 2018, the tide began to slowly turn when Bloomberg News published a series of groundbreaking articles exposing the abuses of the MCA industry. The New York State Legislature enacted legislation extinguishing the lenders’ preferred weapon — the confession of judgment. On July 31, 2020, the Securities and Exchange Commission shut down an MCA company located in Philadelphia. On August 3, 2020, the Federal Trade Commission sued Yellowstone Capital, who paid more than $9.8 million to settle charges that it withdrew money from businesses’ bank accounts without permission and deceived them about the amount of financing and other features of its financing products. On December 23, 2020, New York Governor Andrew Cuomo signed into law the Small Business Truth in Lending Law, which is aimed at protecting small business owners and requires key financial terms to be disclosed at the time a credit provider or broker makes an offer of financing of $500,000 or less. In January 2023, the New Jersey Attorney General settled a case against an MCA company, awarding $27,375,000.00 in relief to its customers comprised of the forgiveness of all outstanding loan balances of those customers, as well as restitution, civil penalties, attorneys’ fees, and costs. On September 25, 2023, the New York State Attorney General struck another blow to the MCA industry with a decision against a group of lenders which deemed the agreements to be “criminally usurious loans,” ordering the recission of all of the subject agreements, a full accounting, vacating confessions of judgment, terminating liens, and compelling the return of all amounts collected by the defendant MCA companies dating back to June 10, 2014. While legislation and court decisions have begun to clamp down on MCA companies, they have done little to alter the landscape. The MCA companies and their legal counsel closely monitor court decisions and with each adverse decision they evolve, redrafting their agreements to eliminate terms found to be unlawful and add illusory “protections” for borrowers. Without sweeping reform of the MCA industry, small businesses remain at risk of falling prey to the insidious tactics of these enterprises, and until then let the borrower beware. Reprinted with permission from The Daily Record and available as a PDF file here .

Severe winter storms, flooding, and other inclement weather events routinely disrupt business operations across New York State. While closing early or sending employees home may feel like a straightforward operational decision, weather-related disruptions can trigger a surprising number of legal obligations under both federal and New York law. Employers that do not plan ahead risk costly payroll errors, wage claims, or compliance issues. The following is a brief overview of several federal and New York wage-and-hour laws implicated when weather interferes with normal business operations. Under the federal Fair Labor Standards Act (FLSA), employers are only required to pay non-exempt employees for hours actually worked. If a business closes due to weather and no work is performed, federal law generally does not require pay.   However:   Employees must be paid for all time worked remotely (including emails or calls from home). Partial day(s) work must be paid for the actual hours worked. Unauthorized work that the employer “suffers or permits” must still be paid. Salary basis rules are stricter. If the employer closes: Full week closure: salary may be withheld. Partial week closure: full weekly salary must still be paid. If the business is open but the employee chooses not to report: Full-day absences may be deducted from the salaried employee’s PTO/vacation banks. Salary deductions are permitted only in limited circumstances. Partial-day deductions from salary are not allowed. Improper deductions risk destroying the employee’s exempt status. New York imposes additional obligations beyond its federal corollary. For example, most industries are required under wage orders to provide “call-in pay” when employees report to work but are sent home early. Depending on the applicable wage order, employers may owe for a set number of hours (the lesser of either four hours of pay or the hours of pay in the employee’s regularly scheduled shift at the state minimum wage rate), even if the time is not worked. Within the hospitality industry, non-exempt restaurant and hotel employees who report to work (whether scheduled or called in) must receive at least their “applicable wage rate,” i.e., the regular or overtime rate of pay minus any “customary and usual” tip credit, for at least three hours for one shift, or the number of hours in the regularly scheduled shift, whichever is less. If employees physically report and are dismissed due to weather, this call-in pay may be triggered. Also, under New York’s “spread-of-hours” requirements, if an employee’s workday exceeds 10 hours from first punch-in to last punch-out (including weather delays or split shifts), employers may owe an additional hour (or more) of pay at minimum wage. Storm-related staggered schedules can inadvertently create spread-of-hours liability. New York also follows a broad “hours worked” standard. Employers must therefore compensate for: Work performed from home during closures. Checking systems or responding to messages. Required on-call time. Bottom line, inclement weather decisions are not purely operational – they carry real legal consequences. Federal salary rules, New York’s call-in pay requirements, leave laws, and general safety obligations can all be triggered by a single early closure or delayed opening. Advance planning and clear policies allow employers to protect both employees and the organization when the forecast turns bad. If you have any questions regarding this article or any Labor or Employment law  issue, please contact Ryan T. Biesenbach  at (585) 258-2865 or rbiesenbach@underbergkessler.com .

We are pleased to announce that G. Thomas Curran, Jr . has joined the firm as Senior Counsel in the Litigation  practice group. Tom helps individuals, businesses, professional service providers, health care providers, and municipalities with complex disputes, contract negotiations, and legal strategy. He has extensive experience in litigation, commercial contracting, and advising on high-stakes legal matters, including multi-million-dollar lawsuits involving complex construction and engineering issues, bankruptcy matters, breaches of contract, and other disputes. Before joining Underberg & Kessler, Tom held a senior legal role with a large, global, publicly traded architecture, engineering, and consulting company, where he was responsible for managing litigation and professional liability claims, professional services agreements, and risk management. He earned his B.S., magna cum laude , from SUNY Brockport and his J.D., cum laude , from Western Michigan University, Cooley Law School.

We are pleased to announce that Lee Ann D. McDonald has joined the firm as Senior Counsel in the Real Estate & Finance  practice group. Lee Ann brings a strategic, business-focused approach to advising lending institutions, borrowers, real estate investors, and developers on complex commercial and residential transactions and leasing matters. Her counsel is informed by extensive experience across both in-house and private practice environments. Prior to joining Underberg & Kessler, Lee Ann oversaw the day-to-day operations of the leasing department for a large regional health system and served as a commercial leasing attorney for a leading commercial real estate development and management company. In addition, Lee Ann spent more than a decade in private practice, advising clients on a wide range of real property matters. She earned her B.A. from Ithaca College and her J.D. from Pace University School of Law.

Underberg & Kessler Partner Jacob H. Zoghlin shared his perspectives on developments and challenges in the NYS cannabis industry in a recent Rochester Business Journal  article titled “New York cannabis industry enters 2026 with growth, uncertainty.” “From a legal and regulatory perspective, one of the most consequential developments shaping opportunities in 2026 is the anticipated federal rescheduling of cannabis from Schedule I to Schedule III under the federal Controlled Substances Act,” said Jacob. He further explained that rescheduling would not immediately legalize cannabis at the federal level or override state law but could strengthen the New York market and provide potential relief from a longstanding tax barrier. “Perhaps the most significant immediate impact of federal rescheduling will be relief from the punitive federal tax treatment imposed by Internal Revenue Code Section 280E,” he said. “Under current law, because cannabis is a Schedule I substance, state-licensed cultivators, processors, and retailers cannot deduct ordinary business expenses such as payroll, rent, and utilities, effectively inflating their federal tax burden well above typical corporate norms.” Jacob serves as Chair of Underberg & Kessler’s Environmental Law and Municipal Law practice groups and is a Partner in the firm’s Cannabis Law , Litigation and Real Estate & Finance practice groups. He counsels individuals, businesses, citizens’ groups, and municipalities on diverse environmental, land use, zoning, cannabis, energy, and municipal law matters. In his cannabis law practice, Jacob helps entrepreneurs grow their businesses by navigating them through complex state and local requirements, advising on license applications to the New York State Cannabis Control Board, assisting with statutory and regulatory compliance, and helping identify social equity benefits available under the Marihuana Regulations and Taxation Act. To view the full article, reprinted with permission from Rochester Business Journal , click here.