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Manufacturing Law Blog

I’m New – And It’s No [Trade] Secret

Posted in Intellectual Property, Noncompete

Greetings – I am pleased to join this group and I wish to extend my sincere thanks to Nicole Bernabo for her contributions.  I hope I can meet the standard that Nicole set on this blog.

For a little background on what brings me to the Manufacturing Law Blog, throughout my working life I have, in one way or another, been linked to manufacturing or issues touching the industry. I have practiced law in the labor and employment field for over 30 years, including with the National Labor Relations Board in Washington, D.C., where I advised Board Members, and in the NLRB’s Brooklyn (NY) Regional Office, where I investigated and prosecuted suspected violations of the law.  As a government attorney and in private practice, I have worked with and represented manufacturers across the United States. Before that, I helped work my way through school on a shop floor and on an assembly line (making blenders).  I hope these experiences will help me make a meaningful contribution to this blog.

One of the biggest surprises in recent years has been the explosion of litigation by manufacturers and others to stop former employees from using, selling or distributing the company’s most valuable assets – its intellectual property.  Whether that property is a “trade secret” or merely sensitive information which gives a competitive advantage, if the first time a company thinks about protecting valuable information is after it has been taken, that may be too late to do much good.  A cop is not going to put out an APB for a thief if you are the one who left a wallet full of cash on the top of your car.  So too, a court may be reluctant to use its power to stop a former employee from (mis)using information that the company left unguarded.

The best way to prevent the misuse of a company’s most secret “secrets” is to lock the door before someone takes them.  So, for my introductory post, let me offer my “Top 10 Tips to Protect Trade Secrets.”

  1. Treat confidential information in a confidential manner.  This means password protect information stored on computers and networks, store hard copies in locked file cabinets inaccessible to workers absent a need, and adopt policies reinforcing the importance of preserving confidential materials.
  2. Adopt confidentiality agreements.  When employees have access to truly confidential material, require those employees to sign confidentiality agreements as a condition of employment.  Tailor those agreements to the employee and her or his access to information.
  3. Coordinate.  Make sure legal, IT, human resources and business leaders all have input into this shared responsibility.  Often these leaders may have a very different idea about what information is truly confidential or valuable.
  4. Name a SPOC.  Designate a “Single Point of Contact” whose job includes a responsibility to coordinate between departments to maximize and coordinate protections.
  5. Invest in IT.  The entire published works for John Adams – 10,000 volumes – can fit on an iPhone.  Invest in software to safeguard against data theft.  Monitor the use of computer systems to make sure confidential materials are not being sent to unauthorized accounts.
  6. Consider the impact of BYOD.  “Bring Your Own Device Policies” could expose company secrets.
  7. Audit.  Periodically review information, policies, procedures and systems to look for weaknesses.
  8. Implement post-termination imaging.  When employees depart, consider imaging workstations to preserve evidence of theft for later use.  Make this routine protocol.  Analysis of the imaging may not be needed for months down the road, but if the computer has been recycled by then, it may be too late.
  9. Restrict all employees.  Make sure software safety and security protocols apply to everyone.
  10. Promptly seek legal counsel.  When you become suspicious of inappropriate activity, seek prompt legal redress.  The more time that goes by, the less likely it becomes a court will take action.

 

Key Provisions In Contracts For Goods/Services

Posted in Contracts, Crisis Management Counseling, Environmental Enforcement, Litigation, Noncompete, OSHA Compliance, Supply Chain

Last week, I had the pleasure of attending our law firm’s 6th Annual Environmental & Energy Issues Summit in Newport, Rhode Island.  Robinson+Cole’s Environmental and Energy Issues Summit brings industry leaders together to discuss topics and regulatory updates relevant to environmental and energy professionals.  This year’s program included subjects such as “Plant Closures, Temporary Employees, Employment and OSHA,” “Environmental Considerations in Purchase & Sale Agreement for Businesses & Real Estate,” “Retail Energy Markets,” and “EHS Management Systems.”  The Summit is an excellent opportunity for our clients and friends to “benchmark” and discuss common issues.  If you would be interested in attending a future Summit, please let us know.

I had the pleasure of providing a presentation regarding contractual provisions that are often overlooked in contracts for goods and services.  Typically, these provisions are at the end of the contract and are inserted by a party’s legal counsel.  These provisions include anti-assignment clauses (i.e., the contract cannot be assigned without written consent), indemnification clauses, non-competition clauses, and forum selection clauses (i.e., where a company can be sued).  I also discussed something called the “battle of the forms” wherein a buyer and seller have competing terms and conditions.  I am happy to share my powerpoint or provide a quick presentation for company personnel if that would be helpful.  You can reach me at jwhite@rc.com.

 

Thank you Jeff, Pam and our Followers

Posted in Uncategorized

 

I have decided to begin the next phase of my career inhouse practicing labor and employment law.  Therefore, it is time for my last post, albeit a goodbye, as an author of this blog.  You are in good hands as my colleague, Matt Miklave, has graciously agreed to take over the labor and employment role on this terrific blog team.

So, a number of big thank you’s are in order.  Thanks to my fellow firm colleagues and blog writers, Jeff and Pam, for sharing their legal intellect, for being tremendous team players and for consistently producing the excellent content that has made this blog so successful.  Jeff, to you in particular, thanks for capably captaining this blog ship over the last few years and inviting me onboard.  You’re a trustworthy captain that will always get his ship sailing smoothly to its destination.

Thanks so much to the blog followers and subscribers for your insightful comments, feedback and your trust in this blog’s content.  Keep reading.  There will definitely be ongoing worthwhile manufacturing legal news from these fine folks.

“We Need to Talk” – OSHA is Looking to Start a Dialogue on Chemical Management and Permissible Exposure Limits

Posted in Industry Outlook, OSHA Compliance

Everyone knows that the permissible exposure limits or PELs set forth in various OSHA standards are pretty old (most have not been updated since 1971), and that we’ve learned a lot about chemical exposure and human health in the years since those PELs were originally published.  OSHA knows it, too.  Furthermore, of the thousands of chemicals in the workplace, OSHA has adopted PELs for less than 500 of these chemicals.  OSHA is looking for guidance on a better way to address these exposures.

On October 9, OSHA issued a “Request for Information on Chemical Management and Permissible Exposure Limits.”  As OSHA explained in its press release, the administration is “launching a national dialogue with stakeholders on ways to prevent work-related illness caused by exposure to hazardous substances.”  The first step is to collect information on the management of chemical exposure in the workplace.

Here are some options OSHA is considering, and questions OSHA is asking:

  •  How can OSHA streamline the updating of PELs, as new toxicological and other human health information becomes available?
  • Is a tiered approach to risk a more appropriate way to assess risk?
  • Are there ways of preventing or limiting chemical exposure other than or in addition to PELs, such as task-based approaches?

This is a great opportunity for manufacturers who make or use chemicals in the workplace to weigh in on waht they believe could be effective, and protective, ways of handling chemical exposure.

Responses to the RFI should be submitted as comments on Docket No. OSHA-2012-0023 at http://www.regulations.gov.  Comments are due May 5, 2015 (180 days from October 9, 2014).

Dealing With Shipping Companies: A Consistent Challenge for Manufacturers/Distributors

Posted in Contracts, Supply Chain

One of the most important things for a manufacturer/distributor is ensuring that its products are shipped in a reliable fashion so they arrive on time and in good condition.  Similarly, manufacturers rely heavily on shipping companies to deliver the raw materials that are used in the production process.  If shipping companies fail to deliver on time, there can be catastropic results.

In my experience, many companies do not have “master agreements” or even a written contract with shipping companies.  Rather, the extent of the relationship may be a phone call asking the shipping company to pick up items from one place and bring them to another.  The risk of operating in this manner, however, is when goods are not delivered on time.  Many shipping companies will say in those situations that they can’t guarantee delivery on a certain date or time, but that the timelines provided are “best estimates.”

For that reason, I encourage manufacturers/distributors to develop terms and conditions that can be used with shipping companies that clearly set forth issues such as:  (1) insurance; (2) who is responsible when the items are damaged; (3) what efforts must be made if the deliveries run into issues on the road, etc.

The reason for instituting such measures can be traced back to the pressures shipping companies are being placed under.  For instance, a recent blog post by Adam Robinson of Cerasis explained the “trucking capacity” crunch.  The post noted that “[o]ver 5,000 trucking companies went out of business in 2012 and nearly 400,000 trucks have been taken off the road. In other words, there are about 8,000 fewer trucks available nationwide on any given day.”  As this shortage continues, it is important for manufacturers and distributors to minimize their risk by developing relationships based on contracts instead of a hand shake or telephone call.

Employee Separation Agreements: Is Your Company’s Agreement A Target For The EEOC?

Posted in Contracts, Employment Decisions, Litigation

When manufacturers determine that it is necessary to let go of an employee there is often an assessment of risk and a decision about whether a severance package should be offered in exchange for a separation agreement that contains a general release and waiver of claims against the company.  Given the recent trend in litigation by the Equal Employment Opportunity Commission (EEOC) over the past year targeting specific language used by companies in these types of agreements, I thought it would be helpful to review some of the language typically contained in releases that require employees to waive any federal discrimination claims: overly broad waivers, settlement provisions that prohibit filing charges with the EEOC or providing information to assist in the investigation or prosecution of claims of unlawful discrimination.

In one of the recent EEOC cases (EEOC v. CVS Pharmacy, Inc., N.D. Ill., No. 1:14-cv-863, 9/18/14), the agency alleged that CVS conditioned the receipt of severance benefits for certain employees on an overly broad severance agreement set forth in five pages of small print.  The EEOC alleged that the severance agreement interfered with the employees’ rights to file discrimination charges and/or communicate and cooperate with the EEOC.   Interestingly, the release language used by CVS is what has been suggested by the EEOC in its very own Enforcement Guidance.  See Enforcement Guidance on Non-Waivable Employee Rights under Equal Employment Opportunity Commission Enforced Statutes, EEOC notice 915.002 at §III(a).  While the court recently weighed in and found that the CVS language was consistent with current law, it is unlikely that the EEOC will back down on this enforcement initiative anytime soon.  

Manufacturers should carefully review the general release and waiver language contained in form separation agreements used by the company and consider whether the language could pose any risk of an EEOC challenge and/or plaintiff-employee challenge, including the following provisions:   

  • Non-disparagement:  Is there an explicit exception for communications with government agencies?
  • Covenant not-to-sue:  Does this clause state that it is not intended to prevent the filing of a complaint with any governmental agency?  The focus should not only be on the EEOC as there are other agencies that enforce similar laws, such as whistleblower protections under Dodd-Frank.
  • Release:  May the release be read to prohibit the employee from filing charges or participating in investigations? Is there an explicit provision clarifying that the Release is not intended to do so?
  • ADEA/OWBPA requirements:  
    • Is the release “written in a manner calculated to be understood” by the employee who will be executing the agreement and specifically refer to rights or claims under the ADEA?
    • Is there a clause allowing for 21-days to consider the agreement prior to signing and a 7-day revocation period after signing?
    • Does the agreement advise the employee in writing to consult with an attorney prior to signing?
    • NOTE: There are additional requirements for any termination of 2 or more employees (i.e. reduction in force, layoff, etc.)

It is always a best practice to avoid broadness and vagueness in any type of employment agreement, and to narrowly tailor any employee restrictions.  Not only does such practice prevent misunderstandings between the employer and the employee regarding expectations, but narrow restrictions are much more likely to be enforceable by a court.

OSHA Updates Reporting and Recordkeeping Rule – New Rules Take Effect January 1, 2015

Posted in OSHA Compliance, Workplace Accidents

OSHA just announced updates to its reporting and recordkeeping requirements for injuries and illnesses, found at 29 CFR 1904. The updates include changes to who is required to comply with the recordkeeping rules, and expands the work-related injuries that must be reported.

Recordkeeping

The list of industries exempt from routine recordkeeping (think OSHA 300 log) has been updated, and is now based on the North American Industry Classification System (NAICS); the existing rule was based on Standard Industrial Classification (SIC) codes.

OSHA exempts “low-hazard” industries from routinely keeping injury and illness records.  Generally, this list includes retail, service, publish and broadcasting, and other low-risk industries. The new list of “partially exempt industries” can be found at Non-Mandatory Appendix A to 29 CFR 1904 Subpart B.  Employers in these industries are not required to keep records of injuries and illnesses, unless otherwise required by OSHA.

Reporting

At the same time, OSHA has expanded the types of injuries that must be reported to OSHA.  All employers (even those exempt from the record-keeping) must report:

  1. All work-related fatalities within 8 hours.
  2. All work-related inpatient hospitalizations, all amputations and all losses of an eye within 24 hours.

Previously, only fatalities and hospitalizations of 3 or more employees were required to be reported.

The reporting deadlines are based on when the employer learns of the injury. So, employers are required to report fatalities within 8 hours of finding out about it, and hospitalizations, amputations and losses of an eye within 24 hours of finding out about it.

To further clarify employer obligations, OSHA notes that: “Only fatalities occurring within 30 days of the work-related incident must be reported to OSHA. Further, for an inpatient hospitalization, amputation or loss of an eye, then incidents must be reported to OSHA only if they occur within 24 hours of the work-related incident.”

Reports can be made by

  1. Calling OSHA’s free and confidential number at 1-800-321-OSHA (6742).
  2. Calling the closest Area Office during normal business hours.
  3. Using OSHA’s new online form – which will be available soon.

Why Manufacturers Should Look At The Federal Trade Commission (FTC)’s Website

Posted in Contracts, Litigation

As readers of this blog know, Pam looks at OSHA’s website often to stay up to date on news that impacts manufacturers.  I tend to look at the Federal Trade Commission (FTC)’s website to see if there are any recent orders or news items that impact manufacturers or distributors from a corporate compliance perspective.  The FTC tends to focus on two different areas:  (1) protecting consumers from deceptive or fraudulent practices in the marketplace; and (2) protecting competition by enforcing antitrust laws.

One area of the website that I would recommend is the FTC’s Business Center Blog.  For instance, this week, the Business Center Blog reported on a multi-million dollar settlement with a company in Texas that the FTC claimed made “baseless weight-loss claims about its green coffee extract to retailers, who repeated those claims in marketing finished products to consumers.”  In another post, the FTC Business Center Blog reports on a recent scheme impacting businesses where “a hacker poses as a senior executive and asks an employee to complete a financial transaction, like a confidential business investment or a payment to a vendor.  Once money is wired to a bogus account, it can be nearly impossible to recover.”

In addition to the Business Center Blog, the FTC’s website has a lot of information that can be helpful to manufacturers and distributors.  The website has an entire section on advertising and marketing, including “Made in the USA” claims.  In addition, I am often asked to counsel clients on their warranties and the FTC’s “Businessperson’s Guide to Federal Warranty Law” is one of the resources that I use during these engagements.

 

 

Cleaning House? – Environmental Issues to Consider

Posted in Environmental Compliance & Permitting, Environmental Enforcement

While spring is typically the time of year we think of for cleaning, I find fall a good time to do it. I probably never got over the feeling of new beginnings that come with fall and school starting. So, as I was cleaning my garage this past weekend (which truth be told is really a four-season job), and thinking about the fact that I was my turn to write, I started contemplating what a manufacturer should be thinking about it when it is “cleaning house.”   By “cleaning house,” I mean off-spec product, or scrap, or just stuff lying around and taking up space, and getting rid of it.  While just tossing the material in the dumpster sounds like an easy solution, the rules governing how to dispose of no-longer-wanted “stuff” are anything but simple.  Furthermore, missteps can cause material to constitute “solid waste” or “hazardous waste,” triggering onerous reporting and handling requirements.

Quick background:  The federal Resource Conservation and Recovery Act (RCRA), 42 USC 6901 et seq, is the law that governs hazardous waste, and the US Environmental Protection Agency has adopted regulations implementing RCRA, which are found at 40 CFR Parts 260 through 265.  EPA delegated authority to implement RCRA to many states, which means that the state regulations mirror, and are occasionally more stringent than, the federal regulations.

Here are a few things to consider:

First, is material still good product? By that I mean, is it still good for what it was intended. An example is wall paint in its original container, but you recently repainted all the walls in the facility a different color, so you no longer need the paint for touch-ups.   If you decide to just throw it out, you’ve discarded that paint, and it’s now “solid waste.”  Depending on the type of paint it is, it might now be “hazardous waste.”  Instead, perhaps you can sell or donate the paint.

If the material is not “good” any more, can it be reclaimed?  Certain materials are considered “solid waste” when reclaimed, while others are not. The answers are not intuitive, and you need to look at the regulations carefully.

Is there exclusion from the definition of “solid waste” that might apply? For example, shredded circuit boards (assuming certain rules are followed), certain process scrap metal and domestic sewage are all not a “solid waste.”

If the material is a solid waste, the next question is whether it is a hazardous waste.  There are two ways a waste can be a hazardous waste – it can be a listed waste; you just look at the lists to figure out whether your material is on one of them.  Alternatively a waste can “exhibit the characteristic of a hazardous waste.”  There are four characteristics – ignitability (based on flashpoint), corrosivity (based on pH), reactivity (unstable, or reacts with water, or can easily detonate), and toxicity (as determined by the Toxicity Characteristic Leaching procedure).

If you have a hazardous waste, it needs to be managed and disposed of properly. If your facility routinely generated hazardous waste, you already know what to do. If not, the rules governing “generators” of hazardous waste are even more cumbersome and complicated than those governing the definition of hazardous waste. It is important to not wait too long to dispose of the waste – the rules limit the time a hazardous waste can be stored. It is also important to make sure that proper paperwork is completed by the transporting company and retained by the generator.

So, enjoy the house cleaning, but be mindful!

 

 

 

Expansion of the Joint Employer Standard May Challenge Manufacturers

Posted in Uncategorized

In this installment of the blog’s 360, I am going to spin off the temporary employee discussion and address the joint employer relationship.  Joint employment has certainly been a big Mcissue for McDonald’s these days and one that manufacturers should also keep on their radar. 

The National Labor Relations Board recently issued a complaint against McDonald’s USA, LLC and is claiming that the franchisor may be jointly responsible for the potential labor violations of its franchise owners because together they jointly exert significant control over the same employees.  The decision to target McDonald’s USA, LLC departs from longstanding precedent that corporations are not responsible for the actions of franchise owners, who pay for the right to use the company brand, but control day-to-day operations, such as wages and terms of employment.

While McDonald’s is in the spotlight today, the NLRB’s proposal to expand the joint employer standard was spelled out in more detail in a recent amicus brief filed in a case that had nothing at all to do with franchisors.  Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recycling & FPR-II, LLC, d/b/a LeadPoint Business Services & Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, Case 32-RC-109684.  Interestingly, the NLRB chose this case because it involves a union that wants a company at the table in collective bargaining involving subcontracted workers.  The union claims in its brief that

The difficulties presented by this triangulated workforce structure has created a second-tier workforce of employees working for lower wages and fewer benefits than the standard employees performing the exact same work. 

The  NLRB essentially argues that a joint employment relationship should be found whenever “industrial realities” make an entity essential for meaningful bargaining.  Both this case and the McDonald’s case are pending. 

Stay tuned.  The NLRB has announced that the issue of whether, and under what factual scenarios, a business will be alleged to be a joint employer will be a focus of NLRB enforcement actions.  While the law remains unsettled in this area, as a preventative measure, manufacturers should examine their business relationships with other entities where the control of the workforce, including wages and working conditions, may be shared.