I Invested Millions in a Business. Can My Partner Say I Don’t Own It?

Napkin Litigation™ | Business Ownership Disputes

When a business becomes valuable, informal promises about ownership can turn into high-stakes litigation.

You invested the money. You trusted the operator. The business became successful.

Now your business partner is telling you:

“You were never actually an owner.”

Can they really do that?

Unfortunately, yes. They can say it and it may even be your burden to prove that they are wrong.

At Lieb at Law, P.C., we regularly represent investors, business owners, and co-owners in disputes where the value of the business has grown, relationships have broken down, and ownership itself becomes the central issue.

We call these cases Napkin Litigation™ because the business deal was real, but the paperwork was incomplete, informal, or never properly maintained.

Investing Money Does Not Automatically Resolve Ownership

Many investors assume that contributing capital automatically makes them an owner. The law is often more complicated.

Ownership may depend on the governing documents, the legal entity involved, the parties’ conduct, tax treatment, communications, and numerous other facts.

Every case is different and that difference starts by identifying the entity in which you claim ownership in (i.e., corporation, llc, partnership, etc.), which is why these disputes frequently require detailed factual investigations and litigation.

A person may have invested millions of dollars into a business and still face a legal fight over whether they own an interest in that business.

These Cases Usually Start the Same Way

The pattern is surprisingly consistent.

A successful operator has experience running the business. A passive investor provides the capital. The parties trust each other.

Instead of carefully documenting ownership, they say things like:

• “We’ll paper it later.”
• “We’re partners.”
• “Don’t worry about the lawyers.”
• “We’ll split everything 50/50.”

For years, everything works. Then the business becomes valuable. That’s when the disagreements begin.

Questions arise about distributions. Financial records become difficult to obtain. Major decisions happen without one owner.

Eventually, someone says: “You were never actually an owner.”

At that point, what seemed like a business disagreement becomes a high-stakes ownership dispute.

The First Question Is Not Who Invested More Money

Many people believe the case turns on who contributed the most money or who worked the hardest. That’s rarely where experienced litigators begin.

The first questions are much more fundamental:

• Who legally owns the asset?
• What legal entity owns the business?
• Who actually suffered the alleged harm?
• What evidence tells the ownership story?

Those answers determine what legal claims may be available and how the case should proceed.

What Evidence Can Matter?

No single document automatically wins an ownership dispute. Instead, courts often evaluate the entire relationship between the parties.

Depending on the circumstances, evidence may include:

• Operating agreements
• Bylaws
• Shareholder agreements
• Membership agreements
• Buy-sell agreements
• Capital contribution records
• Tax returns and Schedule K-1s
• Corporate or LLC records
• Bank records
• Emails
• Text messages
• Draft agreements
• Board minutes
• Witness testimony
• The parties’ course of dealing over time

When formal governance documents are missing or incomplete, the surrounding evidence often becomes critically important.

Why These Cases Become So Expensive

Ownership disputes rarely involve only one legal issue.

Once ownership is challenged, other claims frequently follow, including allegations involving:

• Breach of fiduciary duty
• Ultra vires acts
• Financial mismanagement
• Denial of distributions
• Access to books and records
• Deadlock between owners
• Real estate ownership disputes
• Partnership disagreements
• Corporate governance failures

The longer the dispute continues, the greater the risk that the business itself loses value.

Protecting the underlying investment often becomes just as important as winning the lawsuit.

The Best Time to Evaluate Ownership Is Before Litigation

Many owners don’t begin reviewing their documentation until after relationships have completely deteriorated.

By then, evidence may have disappeared, key witnesses may have changed positions, and important business decisions may already have been made.

If you have invested substantial money into a closely held business, commercial real estate venture, professional practice, or family enterprise, it is worth understanding exactly what documents establish your ownership before a dispute develops.

Concerned About an Ownership Dispute?

If you believe your ownership interest is being questioned, your business partner has excluded you from management, or you are concerned that your investment is no longer protected, obtaining experienced litigation counsel early can make a significant difference.

Lieb at Law, P.C. represents clients in complex ownership disputes involving closely held businesses, LLCs, corporations, partnerships, and co-owned real estate throughout New York and in other jurisdictions where appropriate.

Contact Lieb at Law 646.216.8009

Learn More | Napkin Litigation™ CLE

Co-Ownership Disputes in Real Estate and Closely Held Businesses

Attorney Andrew Lieb’s Napkin Litigation™ CLE series explores the legal and practical issues that arise when ownership, control, and governance break down in closely held businesses and real estate investments. The first course, Co-Ownership Disputes in Real Estate and Closely Held Businesses, is available on demand through Lawline.

View the On-Demand CLE

If your business dispute involves millions of dollars, disputed ownership, or the breakdown of a closely held venture, contact Lieb at Law, P.C. to discuss your situation.

This article is provided for informational purposes only and does not constitute legal advice. Reading this article or contacting Lieb at Law, P.C. does not create an attorney-client relationship. The facts and law applicable to each matter vary, and prior results do not guarantee a similar outcome. Attorney adverting. 

Lieb at Law, P.C.

Business Litigation | Ownership Disputes | Real Estate Litigation

www.liebatlaw.com|646.216.8009

DHR's Proposed Regulations Focus on Settlement, But the Real Story Is Due Process

Editor's Note: This analysis is based on the New York State Division of Human Rights' June 17, 2026 proposed amendments to 9 NYCRR Part 465. A copy of the proposed regulations is available at the end of this article.

On June 17, 2026, the New York State Division of Human Rights ("DHR") proposed amendments to its regulations at 9 NYCRR Part 465. Much of the proposal focuses on creating greater and sooner opportunities for settlement through both informal and formal conciliation. The proposed regulations also establish criteria for evaluating settlement offers, identify minimum standardized terms for settlement agreements, and clarify the process by which a complainant may object to a settlement proposal that DHR otherwise deems fair and in the public interest.

The full 19-page proposal is available for review at the end of this article.

While the proposal is largely framed as a settlement initiative, the most consequential change may have little to do with settlement at all. Instead, it may be DHR's recognition that respondents are entitled to a more definite statement of the allegations against them before being required to defend a discrimination claim.

The real story is due process.

Specifically, DHR proposes to add subdivision 465.11(f), entitled More Definite or Detailed Statement, which would allow a respondent to apply in writing to the Chief Administrative Law Judge for a more definite or detailed statement of the complaint. According to the proposal, this amendment is intended to ensure compliance with the State Administrative Procedure Act.

That is significant because, for years, discrimination respondents have often been required to defend claims based on vague allegations that do not clearly identify the specific conduct, dates, statements, decisionmakers, policies, comparators, or facts underlying the alleged discrimination. In practice, respondents have frequently been left guessing as to the actual allegations they must defend against.

If adopted, the proposed rule would provide respondents with a direct procedural mechanism to seek clarification before hearing, rather than waiting until after an adverse determination to argue that the proceeding failed to comply with the State Administrative Procedure Act. This is more than a technical amendment. It is a recognition that a respondent cannot meaningfully defend a discrimination claim without adequate notice of the allegations being asserted.

Settlement Reform Is Still Important

The proposed regulations also expand DHR's settlement framework. The amendments contemplate conciliation before a complaint is filed, conciliation after a complaint is filed but before a determination after investigation, pre-hearing settlement conferences, division-initiated settlements, and settlement review during the hearing process.

In evaluating whether a settlement offer is substantial enough to warrant termination of a proceeding in the public interest, DHR may consider factors including the probability of success, the reasonableness of the offer, the complainant's economic loss, evidence of mental pain and suffering, the egregiousness of the alleged discrimination, and whether the public interest is best served by continuing the proceeding.

That expanded settlement framework may create earlier opportunities for respondents to resolve cases, particularly where a complainant refuses a settlement that DHR deems reasonable. However, the value of that process will depend heavily on how DHR evaluates settlement value, damages, public interest, and the reasonableness of objections.

What the Proposal Still Does Not Fix

Although the proposed amendments move DHR toward greater procedural structure, they do not go far enough to solve two critical problems in DHR proceedings.

First, the proposed regulations do not create a meaningful discovery dispute resolution process. Litigants may still be required to commence a special proceeding in Supreme Court to enforce subpoenas or compel disclosure. In fact, the proposed amendments appear to move in the opposite direction by eliminating language that previously allowed an Administrative Law Judge to "agree to the issuance of subpoenas" during the preliminary conference process.

That omission matters. DHR proceedings can involve complex employment, housing, education, public accommodation, and business records. Without a clear administrative mechanism to resolve discovery disputes, parties may continue to face delay, inefficiency, and unnecessary court intervention when evidence is withheld.

Second, the proposed regulations do not expressly state that DHR settlements and awards must be evaluated under New York's Consistency-of-Remedies Principle, as established in Thoreson v. Penthouse International, Ltd., 80 N.Y.2d 490 (1992), and affirmed in Thoreson v. Penthouse International, Ltd., 179 A.D.2d 29 (1st Dep't 1992).

To be sure, the proposed regulations reference the "reasonableness of offer," but they do not go into evidence of emotional distress. Stated otherwise, they do not expressly state that damages should be assessed by reference to comparable state and federal case law. That omission is particularly important with respect to emotional distress damages, where DHR determinations are often challenged based on alleged departures from judicial precedent.

Why This Matters for Respondents

For employers, housing providers, real estate brokerages, educational institutions, municipalities, public accommodations, and businesses, the proposed due process amendment could become an important defense tool. If a complaint is vague, conclusory, or insufficiently detailed, respondents may soon have a formal mechanism to demand clarity before proceeding to hearing.

That can impact litigation strategy from the outset. A more definite statement can help respondents identify relevant witnesses, preserve documents, evaluate exposure, prepare defenses, and assess whether early settlement is appropriate.

Stated differently, the proposed regulations are not merely about settlement. They are about how discrimination cases are framed, defended, valued, and resolved before DHR.

What Happens Next

The public comment period is open for 60 days before adoption.

While DHR's proposed amendments are framed largely as a settlement initiative, the more consequential development may be the agency's recognition that respondents are entitled to sufficient notice of the allegations against them. If adopted, the new procedure for seeking a more definite or detailed statement could become a significant due process tool in defending discrimination claims before the Division.

However, the proposal leaves unresolved major issues involving discovery enforcement and consistent damages valuation. Stakeholders should review the proposed regulations carefully and consider whether comments should be submitted before the rule is finalized.

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Source Material

This article is based on the New York State Division of Human Rights' proposed amendments to 9 NYCRR Part 465, published in the June 17, 2026 edition of the New York State Register as I.D. No. HRT-24-26-00008-P.

View the Official New York State Register Publication

Download the Proposed Regulatory Text (PDF)

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Discrimination defense requires more than knowing the law. It requires knowing how administrative agencies apply it. Lieb at Law, P.C. represents employers, housing providers, real estate brokerages, educational institutions, municipalities, public accommodations, and businesses in discrimination litigation and administrative proceedings throughout New York. If your organization is facing a claim before the New York State Division of Human Rights, contact Lieb at Law, P.C. to develop a strategic defense from the outset.

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NY Could Double the Time Required to Become a Real Estate Broker

New York Real Estate Licensing Update

New York May Double the Experience Requirement to Become a Real Estate Broker

The New York State Legislature has passed A9518, which would amend Real Property Law § 441(1)(b) and increase the required supervised salesperson experience from two years to four years before qualifying for a broker’s license.

What Would Change?

Currently, a New York real estate salesperson may qualify for a broker’s license after working under the supervision of a licensed broker for at least two consecutive years, assuming the applicant also satisfies the other licensing requirements.

A9518 would change that supervised experience requirement from two years to four years. In other words, future broker applicants would need twice as much supervised practical experience before becoming eligible for a broker’s license.

Why It Matters

Brokers do far more than close deals. They supervise salespersons, oversee compliance, manage risk, handle agency issues, and are responsible for ensuring that licensed activity is conducted lawfully.

The Big Question

Does more time under supervision actually create better brokers, or does competency depend more on training, mentorship, transaction exposure, and legal education?

The Argument for More Supervision

The responsibilities of real estate brokers have become more complex. Today’s brokers must understand fair housing compliance, agency disclosure, advertising rules, commission issues, antitrust risk, buyer representation agreements, escrow obligations, supervision duties, and Department of State enforcement priorities.

From that perspective, requiring more supervised experience may help ensure that future brokers have a broader base of practical exposure before they are permitted to supervise other licensees and operate brokerage businesses.

The Argument Against It

Time alone does not guarantee competency. Some salespersons receive meaningful mentorship, handle complicated transactions, and study the law intensely within two years. Others may spend four years with limited supervision, limited training, and limited exposure to complex issues.

The better question may be whether New York should focus only on years served, or whether broker readiness should be tied more directly to education, testing, supervision quality, compliance training, and actual experience.

Should the Governor Sign It?

If signed into law, A9518 would be a major shift for future broker applicants and brokerage companies planning for recruitment, succession, and growth.

Whether the change improves consumer protection will depend on whether the additional two years produce better supervision, better legal understanding, and better brokerage practices — or merely delay qualified salespersons from advancing.

Either way, every New York salesperson thinking about becoming a broker should be watching this bill closely.

Learn the Law Before You Lead the Brokerage

Lieb School teaches real estate professionals the legal updates, compliance risks, and practical rules they need to understand before supervising others.

Take Real Estate Continuing Education with Lieb School

NY Just Took Aim at Private Listing Networks: What Zillow, Compass, and Every Brokerage Need to Know

New York Just Took Aim at Private Listing Networks

Assembly Bill A10679 would require public marketing of residential listings unless a seller or landlord gives informed written consent to opt out.

This past Friday, May 29, 2026, the NYS Assembly passed Bill A10679.

On June 1, 2026, it passed the NYS Senate. 

According to the bill jacket, the purpose of the bill is to require timely public advertising or marketing of listed residential properties on platforms accessible to the general public, while permitting non-public marketing only where the seller gives informed, written direction after receiving a standardized state disclosure that explains the risks and tradeoffs of withholding a listing from public marketing.

Why This Matters

The bill directly targets private listing networks, pocket listings, private exclusives, and other restricted marketing strategies where properties may be shown to limited audiences before being publicly available.

The bill justification states that access to information shapes outcomes for buyers and sellers. It identifies Private Listing Networks as a strategy used by real estate brokers to quietly market properties to internal audiences for indefinite periods of time, outside the view of other brokerages and a broader pool of potential buyers.

If enacted, the law would create a new section of the Real Property Law, RPL 443-b, and would require a standardized disclosure form for any seller or landlord who opts out of public marketing.

The Proposed Opt-Out Disclosure

The proposed disclosure form would require sellers and landlords to acknowledge, in writing, the potential consequences of withholding a property from public marketing, including:

• Reduced visibility to buyers, tenants, and agents outside the listing brokerage.
• Limited online exposure through websites, syndicated feeds, email blasts, listservs, newsletters, and similar channels.
• Fewer offers and possible impact on price and timing because reduced exposure may affect the seller’s ability to sell or lease sooner, on better terms, or at a higher price.
• Restricted marketing channels including publicly accessible listing websites, MLS websites, online marketplaces, social media platforms, and broad digital services.
• Continued fair housing obligations because any marketing that does occur still cannot discriminate against protected classes.

Compliance Risk for Brokerages

Real estate brokerage firms should immediately review their private listing, pocket listing, and seller opt-out procedures. Even if this specific bill is not enacted, written informed consent can help show that the brokerage and its agents acted competently, explained material risks, and fulfilled their fiduciary duties.

The proposed law would also prohibit listing agents from altering or omitting required disclosure language in the standardized form. Any additional language added by a listing agent could not be misleading or inconsistent with the purpose of the disclosure.

For brokerages, this is not just a marketing issue. It is a litigation risk issue. If a seller later claims that a private listing strategy reduced exposure, suppressed competition, delayed a sale, or impacted price, the brokerage’s records, disclosures, and consent process will matter. 

Stay Ahead of Brokerage Litigation Risk

Private listing policies are rapidly becoming one of the most scrutinized issues in real estate. Whether this bill becomes law or not, brokerages should review their policies, disclosure forms, and seller communications now to reduce exposure to fiduciary duty, negligence, fair housing, and consumer protection claims.

If your brokerage needs guidance on private listings, seller disclosures, compliance procedures, or defending against real estate litigation, contact Lieb at Law, P.C. to discuss your risk management strategy before regulators, competitors, or plaintiffs' attorneys do.

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Joint Employer Rule Coming from DOJ Requires Deliberate Action in Setting Evidence Rather than Napkin Contracting

The US Department of Labor recently proposed a rule, which if adopted, will increase the possibility that two distinct companies are determined to be a joint employer with respect to claims under the FLSA (wages/overtime), FMLA (leave), and MSPA (seasonal work). 

The DOL’s proposal provides two ways joint employment can be established:

1. Vertical Joint Employment: two or more employers benefit simultaneously from an employee’s work.
2. Horizontal Joint Employment: an employee works separate hours for "sufficiently associated" employers.

The DOL’s factors for determining vertical joint employment include:

1. Whether the person/entity hires or fires the employee
2. Whether the person/entity substantially supervises or controls the employee’s work schedule or conditions of employment 
3. Whether the person/entity determines the employee’s rate and method of employment
4. Whether the person/entity maintains employee’s employment records

DOL’s factors for determining horizontal joint employment include:

1. Whether an employer acts, directly or indirectly, in the interest of another employer
2. Whether there is an arrangement between employers to interchange employees
3. Whether one employer controls or is controlled by another employer, or is under common control with another employer

Businesses can submit comments until June 22, 2026 by two methods where the proposed rule should be identified by Regulatory Information Number (RIN) 1235-AA48:

• Electronic Comments: Submit comments through the Federal eRulemaking Portal at https://www.regulations.gov. Follow the instructions for submitting comments.
• Mail: Address written submissions to: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210.

Should this be adopted, employment contracts and policy manuals are going to be the evidence needed to defend yourself from being named on a related entities wrong. This is not a time to napkin contract if you want to avoid great exposure. 

When wage and hour, leave, or seasonal worker claims expand into disputes over joint employer liability, the exposure can quickly spread across affiliated entities, ownership groups, management companies, and related businesses.

Lieb at Law, P.C. litigates complex employment disputes involving FLSA, FMLA, misclassification, and joint employer claims, while helping businesses build defensible agreements and operational structures before litigation begins.

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The Rules Just Changed: Crime Rates and School Data Are Now First Amendment Protected—What Brokers Must Know

The landscape of Fair Housing liability is shifting on the federal level. While the industry has long avoided discussing "neighborhood quality" for fear of steering, a landmark April 24, 2026, HUD Memo has directed a change in course. Now, according to HUD, truthful, non-racial discussions are protected by the First Amendment when discussing neighborhood quality. However, this freedom comes with a modern twist: the risk of Disparate Impact Claims, like those that were reported on in Newsday's Long Island Divided.

The Lesson from Criminal Background Checks

To understand today's risk, we must first look backwards to 2016 HUD guidance where HUD established that even "neutral" policies, like blanket bans on tenants with criminal records, can be discriminatory because they disproportionately affect racial minorities. This created a three-step burden-shifting test:

1. Does the policy have a discriminatory effect?

2. Is there a "legitimate business interest"?

3. Is there a "less discriminatory alternative"?

2026 HUD Guidance: Facts vs. Steering

HUD’s 2026 position changes that test. HUD now states that providing identical, factual information about crime rates or schools to all clients is not "racial steering" because steering requires unequal treatment or discriminatory intent. That said, factual does not mean the information merely exists, but is actually accurate and not outdated. 

The Convergence: A New Theory of Liability

Yet, as discovered in Long Island Divided, the issue is that real estate brokers do not always give all clients the same information. To do so, a broker would be well served by putting the information into marketing materials to prove its the same. That works well for listing side brokerage when highlighting the positive of an area, but what happens in buyers' brokerage when highlighting the negative? Even on buyers' brokerage, if those materials highlight a negative, the real estate broker will be hurting their chances of obtaining future listings in that area, which is why most just do a discretional whisper. Yet, that whisper can get a broker sued for discrimination even after HUD's 2026 memo.

On top of that, don't forget local laws, such as NYC’s 2025 Fair Chance in Housing Act, which mandates case-by-case reviews of criminal histories rather than blanket denials, agents must be careful with neighborhood data. If a firm’s "neutral" crime-rating system systematically discourages buyers from minority-heavy tracts, it could trigger a Disparate Impact claim—even without discriminatory intent.

Strategic Recommendations

• Fact-Only Communication: Use objective, third-party data rather than anecdotal descriptions.

• Consistency is King: Provide the same data sets to every client to avoid steering allegations, through written proof of consistency.

• End Blanket Prohibitions: Move away from "blacklisting" certain ZIP codes because that is often undertaken based on discriminatory feelings rather than data. 

When these claims hit, they don’t start small. Lieb at Law represents brokerages in high-stakes Fair Housing and disparate impact litigation and helps prevent claims through proactive compliance strategy. Contact us to discuss your exposure.

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New Executive Order Ties DEI Compliance to False Claims Act Risk for Federal Contractors

New Executive Order Ties DEI Compliance to False Claims Act Risk for Federal Contractors

On March 26, 2026, the White House issued an executive order titled Addressing DEI Discrimination by Federal Contractors. The order states that its purpose is to “promote economy and efficiency in Federal contracting by preventing racial discrimination.” 

The order does not regulate DEI programs in the abstract. It directly connects certain practices to federal contracting eligibility, payment, and potential liability under the False Claims Act. Interestingly, the False Claims Act is now before the Supreme Court in Eli Lilly and Company v. United States, et al., ex rel. Ronald J. Streck, where it could undercut or strengthen this executive order by clarifying the rights of a private citizen to bring a claim in claiming an "injury" exists to the United States. 

What the Executive Order Requires

The order requires federal agencies to include a clause in contracts stating that:

“The contractor will not engage in any racially discriminatory DEI activities…”

It also defines those activities as “disparate treatment based on race or ethnicity in the recruitment, employment… contracting… program participation, or allocation or deployment of an entity's resources.”

Contractors must also:

• “furnish all information and reports, including providing access to books, records, and accounts”
• report subcontractor conduct that “may violate this clause”
• comply with agency-directed remedial actions

Payment and the False Claims Act

The order expressly links compliance to payment under federal contracts. The required clause states:

“The contractor recognizes that compliance with the requirements of this clause are material to the Government's payment decisions…”

The order further directs that the Attorney General shall:

“consider whether to bring actions under the False Claims Act against any contractors or subcontractors that violate the clause…”

It also requires prompt review of whistleblower actions brought under 31 U.S.C. § 3730, but again, see the case now before the Supreme Court. 

As a result, practices tied to hiring, promotion, training programs, or vendor selection may have implications beyond contract compliance where payment certifications are involved.

Subcontractor and Vendor Requirements

The order applies to subcontractors and lower-tier subcontractors. It requires that:

“The contractor will report any subcontractor's known or reasonably knowable conduct that may violate this clause…”

It also provides that contracts may be:

“canceled, terminated, or suspended… and the contractor or subcontractor may be declared ineligible for further Government contracts.”

Scope of Covered Programs

The order defines “program participation” broadly to include:

“training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities…”

This definition extends beyond hiring and promotion and includes internal programs sponsored by the contractor.

Enforcement Framework

The order directs agencies to take action for noncompliance, including:

• contract cancellation, termination, or suspension
• suspension and debarment

It also directs federal agencies to identify “economic sectors that pose a particular risk” and issue further compliance guidance. 

Implementation Timeline

• Within 30 days: agencies must begin including the required clause in contracts
• Within 60 days: interim FAR guidance is expected
• Within 120 days: agencies must review and report on implementation

What General Counsel Should Review

• Hiring and promotion practices tied to federal contracts
• Eligibility criteria for training, mentorship, and leadership programs
• Vendor and subcontractor selection and oversight
• Contract terms addressing compliance and reporting obligations
• Internal records, communications, and documentation subject to agency review
• Statements or certifications tied to payment requests
• The case before the Supreme Court and the precedent it sets

Bottom Line

This executive order establishes that certain internal practices may affect federal contract eligibility, payment, subcontractor oversight, and potential False Claims Act exposure. It requires alignment between company practices, documentation, and contractual representations in connection with federal work.

Lieb at Law, P.C. represents companies in litigation arising from federal contract compliance, including False Claims Act claims, contract termination disputes, and enforcement actions. We focus on defending complex matters where regulatory risk becomes litigation.

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EEOC Warning on DEI: What General Counsel Must Fix Now

The Equal Employment Opportunity Commission has sent a clear message to employers: calling a program “DEI” does not change your obligations under Title VII. This is not a political issue. It is a legal risk.

The EEOC’s position is straightforward. Workers must be treated as individuals and judged on their skills, abilities, and merit, not on their race or sex as a general category, which violates Title VII and gives rise to reverse discrimination claims. According to the message from EEOC, a company cannot also be cute and evade these obligations by changing the name of their program from DEI to something like, “Inclusion & Diversity,” “Belonging,” “People & Culture,” or “Opportunity & Inclusion.”

Why This Matters to Employers

The risk is not limited to a formal hiring or promotion policy. It can arise from how opportunities are created, who gets invited, who gets mentored, who gets access to leadership development, who receives leads, and how internal messaging explains those decisions.

What the EEOC Is Really Targeting

EEOC is focusing on whether protected characteristics are being used, directly or indirectly, in employment-related decisions. That includes programs that may look polished, well-intentioned, and modern on paper, but still create unequal treatment in practice. The issue is not whether there is a noble goal, the issue is if someone is disadvantaged because of which demographic group they belong.

To avoid a claim, GCs should audit there:

• Recruiting pipelines designed to influence demographic makeup
• Leadership or mentorship programs limited to certain groups
• Training or advancement opportunities not equally available to all qualified participants
• Distribution of listings, leads, accounts, or customer-facing roles based on identity-driven assumptions
• Internal statements about targets, representation goals, or balancing outcomes
• Programs repackaged under softer labels but built on the same protected-class framework

The Problem with “Equal Outcomes” Thinking

One of the clearest signals in the EEOC’s letter is its rejection of workplace approaches that seek equal outcomes instead of equal treatment and equal opportunity. That matters because many employers spent years adopting programs built around representation goals, demographic benchmarks, and identity-based development tracks. Those approaches are now far more likely to be used against the employer as evidence.

In other words, a company can create legal exposure even when it believes it is doing something positive. Intent does not control the analysis. Structure does.

The Real Risk Is Often the Written Record

Most employers assume the danger lies in what they intended to do. In practice, the danger usually lies in what they wrote down. This is not restricted to the actual policy, but drafts, emails, and chats are also ripe to create danger. Also, there is a recent federal district court decision that cautions about asking AI about your policy because all of that is discoverable in litigation too. Website language, recruiting materials, employee handbooks, training decks, internal emails, chat messages, and policy documents can all become exhibits in a claim so be careful.

That is especially true where language suggests that a company is making decisions based on group identity rather than individual qualifications. Once that language exists, it becomes much harder to defend the program as neutral and lawful.

The EEOC Is Not Just Talking

Employers should not dismiss this as symbolism. The EEOC has expressly said it is prepared to use its full range of enforcement tools, including large-scale litigation, systemic cases, and pattern-and-practice claims. That means employers should expect scrutiny not only of isolated complaints, but of company-wide programs and recurring workplace structures. Also, private litigants are watching and you should expect reverse discrimination claims to tick up. 

What Employers Should Do Now

Employers should immediately review any initiative that touches hiring, promotion, training, mentorship, leadership development, access to opportunity, or internal eligibility criteria.

The goal is not to abandon workplace culture or professional development. The goal is to make sure programs are legally defensible. That means:

• reviewing all current and past DEI-related policies and programs
• removing eligibility limits tied to protected class
• rewriting language to focus on objective, business-related criteria
• eliminating references to quotas, balancing, or demographic targets
• documenting neutral reasons for how opportunities are allocated
• making sure managers and decision-makers are not improvising standards office by office

Bottom Line

The EEOC’s message is simple: employees must be treated as individuals, not as members of a group. If your company has programs that suggest otherwise, the fact that they were created under a DEI banner, or renamed under a softer title, will not shield them from scrutiny.

Contact Lieb at Law

Lieb at Law advises companies on discrimination risk, compliance strategy, and litigation defense. We help businesses identify exposure, restructure policies, and protect themselves before internal programs become the basis of a lawsuit or regulatory investigation.

Need a privileged review of your policies, recruiting materials, training programs, or internal initiatives? Contact Lieb at Law to conduct a compliance audit and address risk before it turns into a claim.

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Section 8 Discrimination Cases Against Housing Providers, Brokerages, and Property Managers Face New Motions to Dismiss After New York Decision

In a significant decision for housing providers across New York and beyond, the New York Appellate Division, Third Department, affirmed the dismissal of a source-of-income discrimination enforcement action on constitutional grounds.

The case, The People of the State of New York v. Commons West, LLC, holds that enforcing New York’s source-of-income protections under Executive Law § 296(5)(a)(1) facially violates the Fourth Amendment when it effectively compels landlords to participate in the federal Section 8 Housing Choice Voucher Program which requires governmental inspections and providing records to the government.

Although the decision will likely be appealed to the New York Court of Appeals (highest state court), it currently stands as binding appellate authority throughout the state, and persuasive authority in all other states.

For defendants facing source-of-income discrimination claims, the ruling immediately alters the litigation landscape.

Key Takeaway: In People of the State of New York v. Commons West, LLC, the Appellate Division held that enforcing source-of-income discrimination laws to compel participation in the Section 8 Housing Choice Voucher Program violates the Fourth Amendment because the program requires consent to government inspections and access to records. As a result, defendants in Section 8 discrimination cases may now assert constitutional defenses and pursue motions to dismiss in courts and administrative proceedings across New York.

The Constitutional Conflict Behind the Case

New York law prohibits discrimination based on lawful source of income, including participation in the Section 8 Housing Choice Voucher Program.

The Third Department concluded, however, that enforcing this requirement against landlords forces them to submit to government inspections and provide records as a condition of renting to voucher holders.

Under federal Section 8 regulations:

• Local public housing authorities must inspect rental units before occupancy.
• Units must meet federal housing quality standards.
• Inspections must occur at least every two years.
• Landlords must provide records relating to rents and comparable units.
• Landlords must sign a Housing Assistance Payment (HAP) contract granting “full and free access” to the premises and records.

These requirements arise from 42 U.S.C. § 1437f and related federal regulations, including 24 CFR 5.703 and 24 CFR 982.405.

The Appellate Division concluded that forcing landlords to participate in a program requiring inspections and document access constitutes an unconstitutional condition.

Put simply, the government cannot require property owners to waive Fourth Amendment protections against unreasonable searches as a condition of complying with state anti-discrimination law.

A Credible Threat of Enforcement Is Enough

The court did not require proof that inspections had already occurred, and in the case before the court, they admittedly did not occur.

Instead, it held that a credible threat of enforcement was sufficient to establish the constitutional violation, which credible threat exists merely from participation in the Section 8 Program.

As the court explained, participation in the program requires landlords “to consent to governmental searches of their rental properties and records.”

Because enforcement of the Human Rights Law would compel landlords to enter a program requiring those searches, the action was dismissed.

Why This Decision Matters for Housing Providers

For landlords, property managers, and real estate brokerage professionals, the decision creates a significant new defense in source-of-income discrimination cases.

Until reversed by the Court of Appeals, defendants should evaluate whether to pursue motions to dismiss in matters pending before:

• New York State courts
• Federal courts
• The New York State Division of Human Rights
• The New York City Commission on Human Rights
• Other administrative enforcement bodies

In each forum, the constitutional analysis in Commons West may undermine enforcement of claims tied to Section 8 participation.

An Industry Inflection Point for Real Estate Brokerage / Property Management Compliance

The decision in People v. Commons West, LLC marks a turning point in how source-of-income discrimination cases are litigated across the real estate industry.

For years, enforcement actions involving Section 8 participation have targeted not only housing providers, but also real estate brokerages and their agents as well as property managers. Brokerage firms are frequently named as respondents based on statements by agents, listing language, or allegations that voucher-backed applicants were discouraged during the rental process.

This appellate ruling introduces a new constitutional dimension to those cases, which has been argued before, but now has binding effect.

If participation in Section 8 requires landlords to consent to government inspections and disclosure of records, and courts determine that compelling such participation violates the Fourth Amendment, then the legal foundation of certain source-of-income enforcement actions may be vulnerable.

For brokerage firms operating across New York, this raises broader compliance and litigation considerations. Defense counsel should begin levaraging this constitutional argument in administrative proceedings and court cases involving voucher-related discrimination claims.

Regulators and plaintiff-side attorneys will almost certainly attempt to limit the reach of the decision until the issue is resolved by the New York Court of Appeals, at least to only Section 8 rather than applying it to all forms of source of income discrimination as the decision was written broadly.

In the interim, Commons West has the potential to reshape how Section 8 discrimination claims are defended throughout the real estate industry.

All housing providers, real estate brokers, and property managers facing source-of-income discrimination claims should immediately evaluate whether a motion to dismiss is warranted in light of People v. Commons West, LLC.

If your business has been named in a Section 8 discrimination complaint, the defense strategy may have changed overnight.

Lieb at Law, P.C. represents housing providers, property managers, and brokerage firms in discrimination defense and constitutional challenges in state courts, federal courts, and administrative proceedings throughout New York, New Jersey, and Connecticut.

Contact our litigation team to evaluate whether this new precedent creates a viable motion to dismiss in your case.

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Co-Ownership Litigation in Business and Real Estate: Partition, Derivative Claims, and Dissolution Strategy

 When co-owners start fighting, the instinct is to “file something.”

That is usually the first mistake.

In ownership disputes involving businesses or real estate, the most important decision is not whether to sue. It is what procedural vehicle you choose. Partition. Derivative action. Direct fiduciary claims. Dissolution. Receivership. Each one changes leverage, remedies, timing, and valuation risk. If you choose wrong at the start, you spend the rest of the case trying to recover.

The partition trap

Two siblings inherit a mixed-use building. One wants to sell. The other wants to keep collecting rent. The knee-jerk reaction is a partition action. But the real question is simple: who owns the property?

• If title is held personally by the co-owners, partition may be correct.
• If an entity owns the property, partition is usually wrong. The dispute is about governance and control.

If the property qualifies as heirs property under RPAPL 993, statutory procedures can alter settlement posture, valuation mechanics, and timing. That analysis belongs at the beginning of the case, not after filing.

Partition disputes frequently overlap with broader business disputes and commercial litigation where ownership structure determines the remedy.

Direct vs. derivative: who was harmed?

In a 50/50 LLC, one member diverts company funds to a related entity. The first legal question is not how offensive the conduct feels. It is: who suffered the injury?

If the entity was harmed, the claim is derivative. If the owner suffered a distinct personal injury, the claim may be direct. Plead this incorrectly and you can lose standing before you ever reach the merits.

Derivative actions for breach of fiduciary duty, self-dealing, and misappropriation are common in ownership disputes. (For more on that, see our work on Derivative Actions and Fiduciary Litigation.)

Common lawsuits in co-ownership conflicts:

• Derivative actions for breach of fiduciary duty or waste
• Direct oppression or freeze-out claims
• Judicial dissolution petitions
• Partition actions involving co-owned real estate
• Books-and-records proceedings used as leverage in buyout disputes
• Emergency applications tied to asset diversion or deadlock

The receiver fantasy

Clients often ask for a receiver immediately. Courts do not grant receivers lightly. Receivership is extraordinary relief. Disagreement is not enough. Allegations are not enough. You need proof that property or business assets are at risk of being lost or materially injured.

Asking for a receiver without sufficient factual support can reduce credibility and weaken leverage in ongoing commercial litigation.

Dissolution is not always leverage

Lawyers often threaten dissolution early in a dispute. Sometimes it works. Sometimes it destroys enterprise value. If the business depends on vendor relationships, licensing, financing, or regulatory approval, public dissolution litigation can trigger cascading harm.

A strong complaint is not always a smart complaint. Litigation strategy must account for operational fragility.

Ethical landmines

Representing the entity versus representing an individual stakeholder is not a minor distinction. Blurring those roles creates conflict exposure and unnecessary motion practice. Ethical clarity is strategic clarity.

The real issue: leverage architecture

Ownership litigation is about designing leverage. The procedural vehicle controls standing, remedies, buyout dynamics, valuation exposure, and pace. The first filing often determines the trajectory of the case.

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Continuing Legal Education: Co-Ownership Litigation in Business & Real Estate

I am teaching a 1-credit live CLE on March 12, 2026 at 12 PM EST covering:

• Direct vs. derivative claim structure
• Partition eligibility and heirs property under RPAPL 993
• Receivership standards and strategic considerations
• Dissolution strategy and valuation risk
• Ethical boundaries in entity disputes
• Client management during active ownership conflicts

If you handle business breakups, governance disputes, or co-owned real estate conflicts, this program focuses on the front-end analysis that prevents avoidable damage.

Course details and registration: https://www.liebatlaw.com/cles/co-ownership-litigation

Andrew Lieb, Esq., MPH is the Managing Attorney of Lieb at Law, P.C., a litigation-focused firm handling high-stakes business disputes, commercial litigation, and ownership conflicts. Attorney profile: Andrew Lieb.

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DOL Proposes Another Independent Contractor Shift. Businesses Should Assume Litigation Is Coming.

On February 27, 2026, the U.S. Department of Labor’s Wage and Hour Division issued a Proposed Rule that may once again change how independent contractor status is determined under the Fair Labor Standards Act.

If finalized, this would be the third major shift in less than a decade.

The current standard took effect in 2024. Now the DOL is considering a return to the 2021 framework, with modifications.

The proposed return emphasizes two core factors:

1. The degree of control the worker actually exercises over the work; and
2. Whether the worker has a genuine opportunity for profit or loss.

The DOL’s stated reason is predictability. It argues that the 2024 “totality-of-the-circumstances” approach, where no factor carried predetermined weight, created uncertainty and discouraged legitimate independent contractor relationships. The agency believes a return to the 2021 “core factors” framework may reduce compliance costs and slightly increase independent contracting.

That is the policy argument.

The litigation reality is different.

This Is an Enterprise Risk Issue, Not a Technical HR Update

Independent contractor classification is no longer a drafting exercise. It is a balance sheet issue.

If misclassification is alleged, exposure can include:

• Unpaid wages and overtime
• Liquidated damages
• Attorneys’ fees
• Class or collective actions
• Parallel state claims under NY Labor Law
• Freelance Isn’t Free Act liability
• Retaliation claims
• Potential personal liability for owners and executives

If your revenue model relies on independent contractors, regulatory volatility does not reduce risk. It increases it.

Each swing in federal policy invites a new wave of audits, private litigation, and opportunistic claims.

Classification Risk Is Built Into How Your Business Operates

At Lieb at Law, P.C., we evaluate classification risk the way a litigator would, not the way a form agreement does.

We look at:

• Compensation and commission structures
• Control mechanisms in practice, not just on paper
• Use of technology for supervision or tracking
• Non-competes and restrictive covenants
• Termination authority
• Integration into core business functions
• How the model will appear to a jury

Independent contractor status is determined by economic reality. That reality is shaped by operations, not labels.

If your agreements say “independent contractor” but your workflows say “employee,” the contract will not save you.

Why Acting Now Matters

Public comment on the Proposed Rule is open through April 28, 2026. The final rule may look different. It may shift again in the next administration.

Waiting for regulatory stability is not a strategy.

The prudent move is to stress-test your model under both frameworks and determine:

• Where exposure exists today
• How a plaintiff’s lawyer would frame the case
• Whether your documentation aligns with actual practice
• Whether structural adjustments can reduce risk without breaking the business model

Independent Contractor Risk Audit

If your company engages independent contractors, now is the time to:

• Audit agreements and compensation structures
• Evaluate control and supervision practices
• Assess exposure under federal and state law
• Review notice, deduction, and payment compliance
• Align operational reality with legal positioning

Lieb at Law, P.C. represents businesses, founders, and executives in high-stakes misclassification and wage-and-hour litigation. We also conduct proactive classification audits designed to reduce litigation exposure before a claim is filed.

Regulatory instability is not a defense to misclassification. It is a reason to prepare.

To schedule a confidential strategy session, contact Lieb at Law, P.C.

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Circuit Court of Appeals Gives Plaintiffs a Tactical Way Out of Pre-Dispute Arbitration Clauses

In Bruce v. Adams & Reese, LLP, the 6th Circuit Court of Appeals held that a pre-dispute arbitration clause was invalid for an entire case because just one claim in the case involved sexual harassment based on a broad interpretation of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 ("EFAA"). Specifically, EFAA 402(a) provides that "at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute . . . no predispute arbitration agreement . . . shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute." At issue in this case was the definition of the term "case," and the Circuit Court defined that term as "encompassing a plaintiff's entire suit." Specifically, the Appellate Court held that "where a plaintiff brings multiple claims in a single suit against a party with whom she has an otherwise-valid arbitration agreement, and one of those claims alleges a 'sexual assault dispute' or a 'sexual harassment dispute,' the EFAA renders the arbitration agreement unenforceable with respect to each of the claims that comprise her case." As a result, a Plaintiff seeking to tactically avoid arbitration can plead a sexual harassment claim as well as their core claims to avoid the suit. However, an entity seeking to compel arbitration can counter, by not arguing that the other claims must still be arbitrated, but by arguing that the sexual harassment claim was not alleged under the applicable pleading standard in the first instance and nothing must be arbitrated. Nonetheless, the Appellate Court left "for another day the question of whether the Yost standard (federal pleading standard), the Diaz-Roa standard (Bell v. Hood’s jurisdictional standard), or some other standard represents the correct interpretation of the EFAA" when determining if the sexual harassment claim was properly alleged. There is going to be a lot of litigation coming on this issue because companies are not going to want to give up their pre-dispute arbitration clauses because creative Plaintiff's counsel have tactically negated arbitration obligations by loosely alleging a weak sexual harassment claim. 

Arbitration clauses are no longer bulletproof.

If your company relies on pre-dispute arbitration agreements, or you are challenging one, contact Lieb at Law, P.C. to assess your exposure and strategy now.

NYC Enacts Gender-Motivated Violence Protection Law

There is a new civil cause of action in NYC (Administrative Code of the City of New York section 10-1104) for crimes of violence motivated by gender that occurred prior to January 9, 2022. Now, any person claiming to be injured by a party who committed, directed, enabled, participated in, or conspired in the commission of a crime of violence motivated by gender may bring a civil claim against that party. This allows survivors to bring claims even if those claims would have otherwise been barred by the statute of limitations. However, the revitalization of claims is not permanent where claims brought under this law must now be commenced within 18 months of January 28, 2026. So, act immediately if this impacts you. Also, if you brought a claim between March 1, 2023 and March 1, 2025 that would satisfy the requirements of a cause of action under this section, you may now amend or refile (if dismissed) their claim to add a cause of action under this section. Finally, you can recover compensatory and punitive damages, injunctive and declaratory relief, attorney's fees and costs, and such other relief as a court may deem appropriate. 

HUD Steps Back on Disparate Impact: Why Courts, Not Agencies, Should Set the Rules

The Federal Government just made a smart move in proposing to remove HUD's discrimination effect regulations in housing (under the Fair Housing Act), which now exist at 24 CFR 100.5(b). Specifically, the notice of rulemaking in the Federal Register explains that setting standards to determine if discrimination occurred is better left to the Courts, who ruled on the issue of disparate impact discrimination and set standards in the 2015 case of Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. Therefore, as HUD puts it, as to its regulations, it has "determined they are unnecessary." Not only are they unnecessary, but have regulations on top of case law is confusing where landlords and brokers must look to varying sources to know how to behave and what is disallowed. Hopefully more regulations that establish standards to determine breaches of law will be deleted and we can go back to a less regulated world with more case holdings guiding behavior based on the specific facts at hand.

Have questions about fair housing compliance, discrimination claims, or enforcement risk? Talk to a litigation team that lives in the case law. Contact Lieb at Law, P.C. 

DEI, the False Claims Act, and the New Enforcement Reality for Employers

National Law Review article published this week highlights a significant shift in federal enforcement strategy: the U.S. Department of Justice is now actively using the False Claims Act (FCA) to scrutinize workplace DEI initiatives at companies that receive federal funds or hold government contracts.

Read the article here:
https://lnkd.in/ee_mvzCg

According to the article, DOJ is issuing civil investigative demands to major employers and treating DEI-related inquiries as potential fraud investigations, not policy disagreements. The focus is no longer limited to what a DEI policy says on paper, but how it operates in practice.

For employers and the attorneys, this represents a material change in exposure.

The FCA has traditionally been used to police false billing and fraudulent payment claims. DOJ is now advancing a novel theory: that maintaining certain DEI practices while certifying compliance with federal anti-discrimination laws can constitute a false or misleading claim for payment. This approach has been reinforced by executive orders, DOJ guidance, and public statements from senior DOJ leadership.

Whether courts ultimately endorse this theory remains to be seen. In the meantime, investigations are underway, and the cost of responding to a CID alone can be significant. Documentation, internal decision-making, and how DEI concepts are operationalized are now front and center.

This is exactly why Attorney Andrew Lieb recently served as a featured instructor for a New York State Bar Association CLE titled Risk-Informed DEI: Balancing Legal Exposure and Organizational Culture. The program was designed to address the reality employers and counsel are facing now.

The CLE focuses on practical, defensible frameworks for advising employers in this environment. That includes identifying where FCA risk may arise, understanding how regulators evaluate DEI implementation rather than labels, and developing documentation and compliance strategies that align with both legal obligations and organizational goals.

For attorneys advising employers, and for organizations that contract with or receive funding from the federal government, DEI is no longer a purely cultural initiative. It is a legal risk management issue that requires careful, informed handling.

Details on the NYSBA CLE, including registration and CLE credit information, are available here:
https://lnkd.in/eHK9FHfk

As enforcement continues to evolve, employers should not assume that rebranding or surface-level changes are sufficient. The question regulators are asking is how programs actually function, how decisions are made, and what representations are being made to the government. Getting that analysis right now can make the difference later.