NEW YORK STATE CHANGES TO EXECUTIVE LAW FOR NOTARY PUBLICS

Apr 07, 2023

By: Christopher J. Babiarz, Esq.



On January 31st, 2023, New York State implemented new changes to the rules and regulations concerning Notary Publics which imposes additional important requirements on all notaries whether they are performing traditional notary services, or electronic notary services.


The most significant new change is the requirement that all types of notaries keep a journal documenting all notarial acts performed for a period of ten years.  The journal must track the following required pieces of information:


1. The date and time the notarial service was performed; and

2. The name and address of the principal (individual whose signature is being notarized); and

3. The number and type of notarial service performed; and

4. The type of credential used to verify the identity of the principal; and

5. The verification procedure used to confirm the principal's identity.


In addition to the five above categories, notaries performing electronic notarization must also document:


6. Identification of the communication technology, certification authority, and verification providers used; and

7. An actual audio and video recording of the act.


While these requirements apply to all notaries performing all types of notarial services, real property transactions are especially vulnerable to fraud, and the notary public is the first line of defense in preventing such crimes.  Fraud involving notaries typically occurs in one of two ways, and diligently adhering to the above-described process significantly helps to eliminate both.


The most obvious way that fraud is committed is when someone tries to get a document notarized and they are not the principal that they are claiming to be.  This type of circumstance can present itself a few different ways, such as by presenting a forged document that has already been signed outside the presence of a notary, and the individual is now seeking to have it notarized after the fact.  Or in a similar situation, the fraudster could be trying to get you to notarize a document without presenting a valid form of identification with a signature to compare to.


By routinely following a patterned behavior whenever you notarize a document you can avoid being implicated in this type of fraud entirely.  The requirements of the journal set forth core pieces of information that will eliminate many types of fraud just by carefully collecting this information in a methodical way.  While there are different credentials and/or personal knowledge which can be used to comply with item 4 in the journal list above, the gold standard would be a government issued photo ID or driver's license.  If an individual is asking you to notarize without providing this particular document, that should trigger a red flag in your mind, and cause you to take a pause and re-evaluate the circumstance to make sure you are being compliant with the requirements above.  A notary may always refuse to provide a notarization service if they are not satisfied with the proof of identity, or if there is concern that the principal lacks capacity to execute a record, or if the notary suspects it is done so under duress.


The second type of fraud is less preventable on the part of the notary, but the impacts and inconveniences are also able to be greatly diminished by diligent journal keeping.  This type of fraud occurs when someone forges your notary stamp/seal using publicly available records.  In this scenario, your seal may be used to complete documents for recording with the county clerk that you will have never seen before, let alone have been in the same room as the person claiming to be the principal.  It is in this circumstance that being able to point to a meticulously kept journal that adheres to a consistent process will enable you to prove that you were not involved in the fraudulent notarization process and help you clear your name more efficiently than any other preventative measure. 


In addition to the above described journal keeping requirements, New York has also clarified the current rules concerning electronic notarization. Previously during the height of the pandemic, notaries were able to provide services via programs such as Zoom and Skype, this program was known as Remote Ink Notarization.  Although this program has since been removed, New York is seeking to replace it with Electronic Notarization. The key difference between these two programs is that electronic notarization requires the use of specialized commercial software which allows the notary to perform identity proofing and credential analysis. Although New York has not provided significant guidance on recommended programs to use for this purpose, we can anticipate that many reputable companies such as title companies will begin to rollout New York compliant programs that provide the above services, and allow for the recordation and storage of audio and video. Until and unless this program and software is in place, the important takeaway is that no notaries should be providing services through programs such as Skype or Zoom in New York without such additional software features. Electronic notarization is an additional program on top of traditional notarization, and must be applied for separately.


Whether you are performing an electronic notarization or a traditional notarization, the requirement to keep a journal is mandatory.  While the imposition of additional requirements on Notary Publics in New York may seem frustrating, they are truly designed in a way to protect the integrity of the notary service, and it also serves as an important safeguard to protect the individual notary as well from those seeking to commit fraud.


This article is intended to be for informational and discussion purposes only and is not to be construed as legal advice or as a legal opinion on which certain actions should or should not be taken.

DOL: NEW RULES FOR EMPLOYEES vs. CONTRACTORS

05 Feb, 2024
By: Elizabeth M. Maugeri, Esq. The Department of Labor issued a new final rule regarding the distinction between employees and independent contractors on January 10, 2024. This rule, while in some ways is similar to the 2021 Independent Contractor Rule (IRC), mostly departs from the previous iteration. The Department believed the 2021 IRC was not fully in agreement with the framework outlined in the Fair Labor Standards Act (FLSA) or the courts' interpretation of the FLSA by departing from accepted case law in applying the economic reality test. Thus, on October 13, 2022, the Department published a Notice of Proposed Rulemaking (NPRM) regarding the classification of employees versus independent contractors under the 2021 IRC. The final rule returns to the notion of framing of investment by a worker as its own separate factor, and the most significant factor being whether the work performed by the worker is an integral part of the potential employer’s business. However, the final rule maintains that no one factor is determinative in assessing if a worker is an employee or independent contractor. Additionally, it offers a broader discussion of how scheduling, remote supervision, price setting, and the ability to work for others concurrently should be considered as factors and allows for more consideration of reserved rights, which was minimized in the 2021 IRC. The main purpose of the changes made was to avoid any potential misclassification of workers whether intentional or accidental. The rule maintains that part 795 continues to contain the Department’s general interpretations. After taking comments, the Department published the final rule, which consists of an outline of six, non-determinative, factors for consideration. The factors are: (1) opportunity for profit or loss depending on managerial skill, (2) investments by the worker and the potential employer, (3) degree of permanence of the work relationship, (4) nature and degree of control, (5) extent to which the work performed is an integral part of the potential employer’s business; and (6) skill and initiative. Other relevant factors may be considered on a case-by-case basis. These six factors are meant to be offered as a guide for assessment as to the economic realities of the working relationship. When assessing opportunity for profit or loss depending on managerial skill, the Department implores potential employers to consider if their workers have opportunity for profit or loss that affect the worker’s economic success or failure when performing the work. Factors that may be relevant to this assessment could be whether the worker can meaningfully negotiate the charge or pay for their work, whether the worker accepts or declines jobs on their own, whether the worker makes hiring decisions, or if the worker chooses when or how the work is performed. If the worker does not have these types of opportunities available, then this factor suggests that they may be an employee. When considering the second factor, whether any investments by the worker are capital or entrepreneurial in nature, the assessment asks what the costs are to the worker for performing the job. Notably, some costs that are unilaterally placed on the worker by the potential employer, such as the tools or equipment needed to perform the job, or the cost of the labor do not necessarily suggest the worker performs independently. If the worker has opportunity to do differing types of work, reduce costs, or extend their market reach, this may indicate they are an independent contractor. However, the costs to the potential employer and to the worker should be considered relative to each other. The comparison should be done on investments, such as if the worker is making similar investments as the potential employer, even if on a much smaller scale. The third factor weighs in favor of a worker being an employee when the working relationship between the worker and the potential employer is indefinite, continuous, or exclusive. However, this does not imply that temporary or seasonal workers should be considered independent contractors as the lack of permanence due to operational characteristics to a particular business should be considered in these circumstances. A worker may an independent contractor if the work performed is non-exclusive, project-based, or generally sporadic. Fourth considers the control over the worker and the working relationship that the potential employer has. It may be relevant to consider whether the potential employer sets the worker’s schedule, supervises the work, limits the worker’s ability to work for others, or the sets pricing or rates of the services. Additionally, when a potential employer’s actions in regard to the worker go beyond that is required for compliance with federal, state, or local laws and regulations, this may be suggestive of an employer-employee relationship. The fifth factor is one of the more significant factors, and asks whether the work performed by the worker is integral to the potential employer’s business. This factor does not ask whether the worker themselves are integral, but rather if the work they perform is. This factor will likely consider a worker an employee if the work performed is critical, necessary, or central to the potential employer’s business. The final factor considers whether the worker utilizes specialized skill sets to perform their work and if those skill sets contribute to a business-like initiative. If the worker does not utilize specialized skills or if the worker is dependent on training to learn or utilize specialized skills, then the factor weighs towards the worker being an employee. However, if the worker brings a specialized skill set to the jobs they perform, this does not automatically indicative of the worker being an independent contractor. The worker’s use of the skills in connection with the job itself is what matters in most cases. While the final rule does not act as anything other than a reinforcement of already established legal guidance, it leans more pro-employee than its predecessor. The impact of it is likely to be felt by companies in the gig economy, such as food delivery (i.e., DoorDash, Postmates, UberEats) or transportation mobility services (i.e., Uber, Lyft); freelancers; construction workers; and truckers. Litigation has already been brought forth by associations and individuals in these spaces, who argue that the final rule creates a much vaguer landscape for assessment which will ultimately force independent contractors into unnecessary employment relationships. Decisions by the courts regarding the filed complaints have not yet been issued. The final rule does not impact any other federal, state, or local laws that use other determinative factors for employee classification. This article is intended to be for informational and discussion purposes only and is not to be construed as legal advice or as a legal opinion on which certain actions should or should not be taken.
wooden blocks with the word mediation written on them

MEDIATION – IT CAN WORK UNDER THE RIGHT CIRCUMSTANCES

21 Nov, 2023
By: Chaim J. Jaffe, Esq. Often times, clients ask why the litigation process is so lengthy. The answer is not always a simple one. The time-frame within which an action is judicially resolved is a function of the court's caseload, the complexity of the matter being litigated and the lawyers' schedules. There are, however, avenues available to litigants in certain circumstances that will allow them to resolve their disputes quicker and, in many cases, more economically. The two most recognized methods of alternative dispute resolution ("ADR") are mediation and arbitration. This article will focus on the mediation process. In many instances, parties to an agreement can contractually agree to submit any dispute that may arise to one or more forms of ADR. Parties' whose claims are not controlled by a contract can similarly agree to utilize the ADR process prior to or subsequent to the commencement of a formal court litigated matter. Finally, there are circumstances under which a judge presiding over a court litigated matter can "order" the parties to participate in the ADR process. Mediation is usually the first step in the ADR process, although parties can agree to skip this option and proceed directly to arbitration. Parties who agree to submit their dispute to mediation will agree who the neutral mediator will be. This individual can be an attorney whom counsel for the litigants believes is best qualified to impartially provide an opinion as to the merits of the underlying dispute. In many written contracts, the parties will agree to select the mediator from one of several nationally respected mediation companies. Procedurally, the mediation process is relatively straight forward. Once the parties agree on a neutral mediator, the parties will enter into a written mediation agreement with the mediator. In addition to the parties usually agreeing to equally bear the mediator's fee, the parties will be required to agree to, among other things, the confidentiality of the proceeding, that nothing disclosed during the mediation sessions will be used at trial (if the mediation process is unsuccessful) and that the mediator cannot be called by either party as a witness if the dispute proceeds to a court supervised process. Prior to the commencement of the mediation session, both parties will usually be required to provide the mediator with a confidential written mediation statement, the length of which depends on the complexity of the matter and the mediator's instructions. This pre-hearing submission will usually include a description of the parties, the underlying facts and circumstances of the dispute, the legal issues involved, the parties' respective strengths and weaknesses, the resolution of specific issues by the mediator that the parties believe would be beneficial in resolving the entire dispute and a history of any previous settlement efforts undertaken by the parties. The mediation session can be held wherever the parties agree. Sometimes it can be held at the mediator's office or at the office of the attorney for one of the litigants. It is not uncommon at the beginning of a mediation session for the mediator to gather the parties in the same room for purposes of reviewing the "ground rules" and for allowing each party to make some opening remarks. At the conclusion of this "joint session", the mediator will separate the parties into different rooms. The mediator will then conference separately with each party. The amount of time that the mediator conferences with each party can vary and can often be lengthy. It is not uncommon for parties to wonder why the mediator is spending so much time conferencing with the opposing side. It is during these private conferences that the mediator "goes to work". The mediator, needing to be very good listener, will allow the participants to tell their "side of the story". The mediator will provide the litigants with his/her view of the case, including an opinion as to the legal issues involved and the monetary value of the claim being asserted, where money damages are involved. This process continues until (a) the conclusion of the agreed upon time for the mediation session, (b) the parties have reached a resolution, or (c) the mediator and the parties agree that a resolution cannot be achieved. It is important to emphasize that without express permission from a party, the mediator will not share what was discussed during the private conference with the opposing side. The participants to the mediation need to feel comfortable discussing the matter openly and freely with the mediator. Simply stated, each individual in mediation needs to gain the mediator's trust and vice versa. Once that trust is established, the hope is that the parties will be more amenable to looking at their dispute from a different perspective. What makes mediation an attractive alternative to the court system is that the process is not binding. The parties are free to accept or reject the mediator's recommendation. In some written agreements, mediation might be a required precursor to proceeding to a binding arbitration process. Where no written agreement controls the dispute, the parties are free to proceed with commencing a formal court action or can agree to submit their claim to binding arbitration. Mediation can be a very productive ADR mechanism, the results of which depend on the effectiveness of the selected mediator and the parties' willingness and desire to resolve their dispute quicker and more economically.
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