Four legal exposures that could cost your business in 2026

This article was written by Commercial and Financial Services Partner, Jacob Prudhomme, and International Trade and Customs Partner, Luke Engan.

Most Long Island mid-market companies aren’t failing compliance audits. They’re losing value in quieter ways, through outdated contracts, overlooked workforce changes, and structural gaps that surface only when it’s too late to fix them cheaply. 

1. Tariff refunds you may not know you’re owed 

Many suppliers have passed tariff costs to customers in recent years. When those tariffs are later reduced, excluded, or refunded, does your pricing adjust accordingly? 

In some cases, relief never flowed downstream from the importer of record. A contract review can determine whether tariff-related adjustments belong to your business. Rather than wait for the Supreme Court to settle the question of whether certain “Liberation Day” tariffs were collected illegally, take steps to line up for possible refunds. 

2. New York employment law: higher stakes in 2026 

Multiple changes are now enforceable, increasing exposure for employers: 

• Minimum wage increases in Nassau and Suffolk (effective January 1, 2026); 

• Higher overtime thresholds affecting exempt classifications; 

• Credit history restrictions in hiring (effective April 18, 2026); 

• Expanded enforcement with stop-work authority and steeper penalties; 

• Independent contractor scrutiny with aggressive federal and state enforcement. 

Outdated classifications and wage practices now carry real financial risk. 

3. Deal readiness: why diligence starts before you’re ready to sell 

Even businesses not actively seeking buyers are being evaluated through a transaction lens. Investors, lenders, and strategic partners are conducting deeper diligence earlier, and exposures directly affect valuation and deal certainty. 

Common gaps that surface too late: 

• Unsigned or outdated agreements with customers and suppliers 

• Unclear termination, assignment, or change-of-control provisions 

• Missing corporate records or inconsistent ownership documentation 

• Informal arrangements that don’t survive scrutiny 

Addressing these issues now preserves leverage when opportunities arise. 

4. LLC Transparency Act: New York reporting requirements 

The New York LLC Transparency Act took effect January 1, 2026, requiring beneficial ownership reporting for certain LLCs. Guidance is still evolving, and noncompliance may result in penalties or administrative complications. 

The bottom line 

The most urgent legal risks in 2026 aren’t obvious violations. They’re structural issues that go unnoticed, until diligence, an audit, or a transaction brings them to light. 

A targeted review now can prevent disputes, penalties, and value erosion later. 

If you need any support or legal advice, you can contact Jake Prudhomme, Commercial & Financial Services Partner here.