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Manufacturing Law Blog

Five 2015 Corporate Compliance / Litigation Issues Manufacturers Need To Keep An Eye On

Posted in Class Actions, Contracts, Crisis Management Counseling, Employment Decisions, Industry Outlook, Litigation, Product Liability, Workplace Accidents

It is our annual tradition at the beginning of each year to report on significant issues that face manufacturers/distributors in the year ahead.  Two weeks ago, Matt reported on significant issues in the labor/employment arena.  Last week, Pam reported on Environmental, Health and Safefy (EH&S) issues

To round out the series, I’ll be writing about issues that I will be watching from a corporate compliance/litigation perspective. 

  1. Data Breach / Cyber Insurance:  Over the last two years, countless high profile companies including Target and The Home Depot have been victims of massive ”data breaches.”  Some commentators, such as in Industry Week, have argued that small to mid size manufacturers will be the next target.  As part of this discussion, insurance companies have developed insurance programs to cover data breaches.  There has also been litigation filed over whether data breaches are covered by a company’s typical commercial general liability policy.  I expect that we will get more answers in 2015 to these questions. 
  2. Government Economic Incentive Programs:  Manufacturers and distributors should continue to monitor the slew of economic incentives being offered by both the federal and state government.  From time to time, we tweet out to our Twitter followers notifications regarding these programs and we have lawyers who help counsel clients through these programs.  To follow us on Twitter, click here.  
  3. Temporary Employees / Workplace Safety:  As readers of this blog know, we have written several blog posts about the pros and cons of using temporary workers to make up for the shortage of skilled labor.  From a litigation perspective, the use of temporary employees can lead to workplace accidents that ultimately lead to government investigations and litigation.  The training of these temporary employees by their host companies is of paramount importance because often times the general training provided by the staffing company is far from ideal.  In 2015, we will continue to monitor how government regulators are handling accidents involving temporary workers. 
  4. Terms & Conditions of Sale / Purchase:   In 2014, there was an uptick in concern about terms and conditions of sale or purchase.  As we discussed in prior posts, both sides of a transaction often have their own terms and conditions that conflict with the other.  Often, these conflicts are ignored until a shipment is late or a product is defective.  We continue to develop a streamlined process for reviewing a manufacturer’s terms and conditions and we will be monitoring litigation that arises in 2015.
  5. Class Actions:  Manufacturers continue to face class actions around the country particularly with respect to those companies that sell consumer products.  The trend continues to be that plaintiffs will sue manufacturers and distributors for misleading statements about their products as opposed to claiming that they were injured.  These class actions are not just being filed against the mega companies, but they also are filtering down to the smaller companies, which is something we will continue to watch in 2015. 

Five 2015 Environmental, Health and Safety Issues Manufacturers Need to Keep An Eye on

Posted in Environmental Compliance & Permitting, Industry Outlook, OSHA Compliance, Workplace Accidents

Matt set a pretty high bar last week, summarizing his thoughts for what could be a tumultuous 2015 on the labor and employment front.  Now, it’s my turn to provide some thoughts for 2015 the EHS front.  I’m not sure I’d call all of these predictions, since we know that they’re out there – more like “stuff to watch out for.”

1. New OSHA reporting requirements take effect. As we discussed back in September, OSHA has updated its reporting and recordkeeping requirements. The changes became effective January 2, 2014.    It will behoove manufacturers to make sure they know the new rules, which can be found here.  Any inspections in 2015 will focus on this.

2. OSHA and Temporary Workers.  OSHA continues to emphasize the need for training for temporary workers, citing injury rates that are higher than for permanent employees. We discussed this issue in August.  Again, if you have temporary employees, expect inspections in 2015 to focus on them and their training.

3. Region 1 – Local Emphasis Program focused on Noise.  Falling into the “in case you missed it” category, OSHA’s Region I (ME, VT, NH, MA, RI, and CT) announced in October that it was renewing the local emphasis focused on noise.  Targeted inspections will focus on a variety of manufacturing sectors. Check your program, monitoring, audiometric testing and your training.

4.  Changes to hazardous waste rules.  EPA published final revisions to the “definition of solid waste” regulations in December 2014.  The definition of solid waste is used to determine whether a material is a “hazardous waste.”  These changes focus on the recycling of “hazardous secondary materials.” I’ll write more about this in my next post, but the key takeaway here is that recyclers of hazardous materials will now be required to have permits. It also changes requirements for generators.  As with all changes to federal hazardous waste regulations, these changes will not become effective in states that have been delegated the hazardous waste program (all New England states have) until those states adopt the changes as well.

5.  Climate Change and Adaptation.  In October 2014, EPA and the regions issued “Climate Adaptation Plans.”  Here are links to the Region 1 and Region 2 plans, as well as link to EPA’s Climate Change Adaptation page, which has program specific plans, as well.  The takeaway for manufacturers is that EPA recognizes that climate adaptation will affect both planning and enforcement – for example, previously unimpaired waters may become impaired, affecting the effluent limits in a permit.

Five 2015 Labor and Employment Predictions for Manufacturers

Posted in Benefits, Employment Decisions, Labor Relations, Litigation

The second half of 2014 was a whirlwind of activity on the labor and employment front, and I expect that trend to continue in 2015 with manufacturers having to navigate the rapids created by these developments.

The United States Supreme Court will be called on to address the Constitutionality of state medical and recreational marijuana laws now that Nebraska and Oklahoma have filed an “original jurisdiction” lawsuit against Colorado.  Under Article III of the United States Constitution, only the United States Supreme Court has jurisdiction over lawsuits between two or more states, so it may be difficult for the Court to duck the issue.  The result could either put the brakes on the “legalization” train or force employers to consider the serious issues presented by marijuana users working in high risk occupations and industries.   Read the Complaint here:  http://www.ok.gov/oag/documents/NE%20%20OK%20v%20%20CO%20-%20Original%20Action.pdf

The National Labor Relations Board’s recent “quickie” election rule and decisions regarding use of emails, deferral to arbitration awards, mandatory arbitration and confidentiality policies likely will result in significant new claims against manufacturers.  Manufacturers will have to consider wholesale revisions to their employment policies or risk litigation.  Read the Final Election Rule here:  http://www.nlrb.gov/news-outreach/news-story/nlrb-issues-final-rule-modernize-representation-case-procedures

Ballot initiatives addressing a plethora of workplace standards – paid sick leave, higher minimum wages, break time, and other workplace protections – will likely find their way onto the ballots in numerous states and localities.  Read the blog entry on this topic here:  http://www.manufacturinglawblog.com/2014/11/the-show-in-2015-pass-the-popcorn-please/

Some multi-employer and single-employer pension plans which face funding challenges will certainly seek to take advantage of the newly enacted 2014 Pension Reform Act.  The complex process required to permit pension reductions for retirees – application to the Department of Labor followed by an election among pension plan participants – likely will postpone actual pension reductions until 2016, but the process to implement those cuts will begin.  Read the Act here:  http://edworkforce.house.gov/uploadedfiles/bill_text_bipartisan_multiemployer_pension_reform.pdf

And while the United States Department of Labor (“DOL”) has been silent so far on the new and more stringent “labor persuader” rule, I would not be shocked to see that rule come out in the Q1 2015 as the Obama Administration heads into its last act.  If adopted as proposed, labor relations professionals and the manufacturers who use their services may have to file detailed financial disclosure reports with the DOL (even if the services do not relate to union avoidance efforts).

All-in-all, the combination of these developments will likely keep the HR and Labor Relations departments of manufacturers pretty busy in 2015.

 

Goodbye, 2014 – Hello, 2015!

Posted in Industry Outlook

We wanted to use this last post of the year to wish all who of you who read Manufacturing Law Blog a wonderful holiday season, and a very happy, safe and healthy New Year!

We will be posting in early January our collective thoughts on the issues that we think will be of interest to manufacturers in 2015.  We see good things on the horizon – the economy seems to picking up, which likely means that orders will be up.

If there are issues you particularly would like us to address in our blog, please reach out to us by posting a comment below, through the “contact us” button above, or by emailing any one of us individually (jwhite@rc.com, pelkow@rc.com or mmiklave@rc.com).    Our goal is to provide information that is timely and useful.

Happy Holidays, Jeff, Pam and Matt

The Gift-Giving Season? Three “Game-Changing” Employment Developments Impacting Manufacturers

Posted in Benefits, Class Actions, Employment Decisions, Labor Relations, Litigation

The approaching holidays may have put Congress, the National Labor Relations Board and the United States Supreme Court in the “gift-giving” mood.  In the last week, three significant developments occurred which may radically affect manufacturers in 2015.

On December 11, in Purple Communications, a divided National Labor Relations Board ruled that employees had a statutory right to use their employers’ email systems and computers to organize.   The Board’s decision can be found here:

http://www.nlrb.gov/case/21-CA-095151

Impact:  While the Board’s decision will certainly be challenged in this and other cases, if left standing, employers will have to consider wholesale policy changes, and employees and their unions will have a new powerful organizing tool.

Next, on December 9, in Integrity Staffing Solutions, a unanimous United States Supreme Court held that the time warehouse employees spent waiting to pass through security screenings (an estimated 25 minutes each day) was not compensable time under the Fair Labor Standards Act.  The Court held that such security screenings, which solely benefited the employer by reducing theft, were “noncompensable postliminary activities” (and thus unpaid) even if the employer could have reduced the amount of time employees spent on these activities.  The Court’s decision can be found here:

http://www.supremecourt.gov/opinions/14pdf/13-433_5h26.pdf

Impact:  The Court’s decision, the second time this year where the Court has rejected employee claims that pre- and post-shift activities were compensable, gives employers greater latitude in dealing with wage issues.

Finally, over the weekend, the United States Senate approved the omnibus spending bill to keep the government open.  Tucked into that voluminous package is the “Multi-Employer Pension Reform Act of 2014.”  The 161-page amendment permits distressed multi-employer pension plans to unilaterally cut the vested retirement benefits of employees and retirees.  That legislation can be found here:

http://democrats.rules.house.gov/sites/democrats.rules.house.gov/files/documents/113/amdts/satohr83/Kline-Miller.pdf

Impact:  This legislation significant alters the landscape for employers facing trustee or union demands to increase pension contributions to troubled multi-employer pension plans.  At the same time, for the first time since the 1974 adoption of ERISA, “vested” pension benefits of retired workers can be unilaterally reduced by pension trustees.

Each of these developments is worthy of extensive discussion.  In future posts, we will explore the implications of each.

Data Privacy: A Bill in Congress Every Manufacturer Should Be Aware of

Posted in Best Practices, Industry Outlook

One of the issues that manufacturers/distributors are paying more attention to is their document retention policies.  Things get complicated, however, when a corporation has operations outside of the United States.  It is not uncommon, for instance, for a manufacturer/distributor to store information on a computer server that is housed outside of the United States.

Records retention, and the related concepts of data privacy and security, have long been treated differently in the U.S. and Europe.  The European nations historically have had a much higher commitment to protecting both privacy and personal data than the U.S.  In contrast, the fact that a company stores its data on a server that is located in a foreign country is unlikely to excuse compliance with document requests directed at the U.S. company in a civil action or regulatory inquiry in the U.S.

As a related issue, there have been questions raised on the ability of the U.S. government to obtain information (via a warrant) that may be maintained overseas.  There is a bill in Congress that is attempting to address that issue.  As described by the National Association of Manufacturers’ Blog, Shopfloor, NAM is supporting the Law Enforcement Access to Data Stored Abroad Act, or LEADS Act, (S. 2871), introduced by Senators Hatch (R-UT), Coons (D-DE), and Heller (R-NV).  The main thrust of the bill is that it would preclude the use of a U.S. warrant to obtain content stored on servers outside the U.S. unless the content is in the account of a “United States person.”

Manufacturers and distributors that have any communications kept overseas should monitor this bill closely to see if it is passed.  This is another example of the tension that exists between data privacy laws in the U.S. and elsewhere and companies need to be aware of these issues because a small change in document retention policies could have widescale implications.

Manufacturers Are Building Occupants, too – EHS Issues Related to Building Occupancy

Posted in Environmental Compliance & Permitting, Industry Outlook, OSHA Compliance, Real Estate

Obviously, our blog focuses on issues that affect manufacturers.  Specifically, my posts deal with environmental or health and safety issues manufacturers face. Sometimes, though, it’s good to step back and remember that manufacturers are also companies that occupy buildings and have employees, and there are environmental or health and safety issues that just go along with occupying a building and having employees.  Here are just a few….

Winter and snow removal. Here in Connecticut, we’ve already had our first snow storm.  Are your employees responsible for cleaning snow from parking lots and driveways?  Or cleaning snow off of your (probably flat) roof?  If so, keep safety in mind when assigning those tasks.  Is the person on the roof provided with fall protection?  Is the person shoveling the sidewalk up to the task?  Here’s a link to OSHA’s page on hazards associated with snow removal on roofs.

Asbestos Containing Material (ACM).  Even if you don’t own the building you occupy, you have a responsibility to know if and where any ACM or “presumed” ACM is located, and to provide your employees information on hazards if they are likely to come into contact with it.  OSHA’s Asbestos Standard can be found here.  If you renovate your space, EPA air regulations require that you remove any ACM that could be disturbed before renovating.

Fire Brigades and Emergency Plans.  Did you establish a fire brigade? Is so, are its members properly trained and do they have the proper equipment? Do you have a written plan? Here are the regs. Even if you don’t have a brigade, you may be required to have an emergency action plan or a fire prevention plan.

Spill Prevention, Control and Countermeasure Plans.  Do you store oil on your site?  Do you have tanks for emergency generators, fire pumps? What about oil-filled transformers? EPA regulations require that anyone who stores more than 1320 gallons of oil above ground (not counting containers less than 55 gallons) or 42,000 gallons of oil below ground, where there’s a chance that a spill could reach navigable water, must prepare a Spill Prevention, Control and Countermeasure Plan.  These plans require training and education, and secondary containment for oil storage.

There are clearly other environmental or health and safety requirements that may apply to building occupants. It’s good to periodically evaluate those rules that may apply to you.

 

 

The “Show” in 2015 – Pass the Popcorn, Please

Posted in Best Practices, Employment Decisions, Labor Relations

Anyone trying to read the tea-leaves of the recent elections might want to take a step back and slow down before predicting how they will impact American manufacturers in 2015.  The recent, dramatic drop in oil prices may have had a positive impact on the manufacturing sector, but could not have been predicted just a few months ago when the price per barrel of crude oil dropped from $100 to under $80.  So too, the confusing results from recent elections make future predictions difficult.

Republicans may have taken control of Congress, but the Obama Administration’s agencies still aggressively seek to “change” the legal backdrop.  The EEOC, NLRB, DOL, OSHA and OFCCP (the “Alphabet Agencies”) continue to explore increased workplace oversight and regulation.  One could justifiably wonder who will “win” the inevitable “tug of war” between a pro-labor administration and a pro-business legislative branch, especially when no one seems to be exploring compromise.

And, while it may be an “easy call” to claim 2015 will only result in stalemate, at least on the state and local level, “status quo” is not a certainty.  While voters sent the GOP to Washington with new majorities, those same voters increased and complicated employment regulations on the state and local level.  Voters overwhelmingly voted to increase the hourly minimum wage in four “conservative” or “red” states (Alaska — $8.75; Arkansas — $7.50; Nebraska — $8.00; and South Dakota — $8.50) and two “liberal” or “blue” cities (San Francisco and Oakland — $12.25).  Voters also approved an “advisory” minimum wage increase in Illinois ($10.00). One state (Massachusetts) and three cities (Trenton, and Montclair, New Jersey and Oakland, California) approved paid sick leave laws, bringing the number of jurisdictions with mandatory paid sick leave up to 19.  Two states (Alaska and Oregon) and the District of Columbia voted to approve the use of recreational marijuana, bringing the number of states permitting the use of recreational or medical marijuana to a solid majority.

The success of these ballot initiatives may either be a “flash in the pan” or a roadmap for more ballot measures in 2015.  For this employment lawyer, I will predict only that I’ll need to get some more popcorn for this show.

Links to relevant ballot initiatives:

Minimum wage laws:  http://www.hr-headaches.com/wp-content/uploads/sites/5/2014/11/map.jpg.

Sick Leave Laws:

Massachusetts:  http://www.sec.state.ma.us/ele/ele14/pip144.htm

Trenton, NJ:  http://nj.gov/counties/mercer/officials/clerk/pdf/cc_trentonsamballots.pdf

Montclair, NJ: http://www.njtimetocare.org/sites/default/files/Montclair%20Ballot%20Nov%202014%2017.pdf

Recreational Marijuana: 

Alaska:  http://www.elections.alaska.gov/doc/sb/14GENR/HD1-JD4-GEN14-SP.pdf (sample ballot with ballot question); http://www.elections.alaska.gov/results/14GENR/data/results.htm (election results)

Oregon: http://voteyeson91.com/wp-content/uploads/2014/06/053text.pdf (ballot question); http://gov.oregonlive.com/election (election results)

District of Columbia:  http://dcmj.org/ballot-initiative/

Federal Trade Commission (FTC) Settles Complaint Against Patent Troll That Manufacturers Should Be Aware Of

Posted in Class Actions, Intellectual Property, Litigation, Product Development

Earlier this year, I wrote about efforts to reform the patent system to curtail abuses by “patent trolls.”  Patent trolls do not manufacture anything.  Rather, they often buy up patents and then bring lawsuits against businesses seeking to extract licensing fees.  Last week, the Federal Trade Commission (FTC) reported on its blog that it had settled a complaint against a patent asserion entity (a.k.a. patent troll) that the FTC claimed had falsely threatened patent suits against small businesses or made “unfounded claims that other companies have paid for patent licenses.”

Specifically, the FTC’s blog reported:

[T]he respondents sent out a series of letters to thousands of small businesses. The first letter – sent to more than 16,000 businesses on the letterhead of one of MPHJ’s dozens of six-letter subsidiaries – told the recipient they “likely have an infringing system” and directed them to contact the sender within two weeks “so that we may agree with you upon an appropriate license arrangement if one is needed.” The letter offered to settle without court action if the business agreed to a license of $1,200 per employee. (Other versions said $1,000.)

The FTC alleged that the patent troll made a series of misrepresentations, including that lawsuits would be filed even though the FTC reported that the patent troll did not file a single lawsuit.

WHAT IS THE KEY TAKE AWAY FOR MANUFACTURERS?

The rash of patent troll lawsuits against manufacturers has been on the rise.  Typically, these lawsuits are preceded by a letter seeking a fee in exchange for a license.  Even though a lawsuit may never be filed, it is important under most circumstances to advise legal counsel immediately because when a company is notified can be important to the litigation.  Additionally, if you see lawsuits being filed by others in your industry, track those developments closely because plaintiff’s lawyers often find an industry and move from one company to the next.  The good news, however, is that the FTC is taking notice, which hopefully will help stem the tide.

E3.gov: Economy, Energy, Environment – Another Resource for Manufacturers

Posted in Best Practices, Industry Outlook, Supply Chain

“To compete in today’s global marketplace, manufacturers need to be smart, innovative, and sustainable.” That’s the first thing you read on the federal government’s E3 webpage – E3 stands for “Economy – Energy – Environment.”

Manufacturers are an adaptable bunch, or they don’t stay in business for very long. Today, with materials of all sorts increasing in costs or impact, manufacturers who want to adapt to be more energy efficient, sustainable or “green” may have another tool to help them. A number of federal agencies – EPA, Commerce, Labor, Energy, Agriculture and the SBA – have teamed together with state and local governments to create E3, which is described as a “technical assistance framework.” It’s not a prescribed program. Instead, “E3 joins forces with local communities to connect small and medium-sized manufacturers with experts from federal agencies, states, and regions.

In addition to providing technical assistance, E3 supports the new Investing in Manufacturing Communities Partnership (IMCP) initiative. The goal of the IMCP initiative is foster manufacturing and help communities attract manufacturing jobs and investments. Click here for the IMCP Playbook, which is intended to provide communities with a three-step approach, pulling together existing funding and technical resources and providing best practices. If your community isn’t aware of or taking advantage of these resources, this would be good place to start.

Another key facet of the E3 program is the Green Suppliers Network, which connects smaller and mid-sized manufacturers (“Partners”) with large manufacturers and their supply chains (“Corporate Champions”). Participants in the Green Suppliers Network can request assessments that provide a report that lets the company know where it stands from a process perspective, and sets forth opportunities for improvement, along with possible cost-savings.

Writing about these issues gives me the rare opportunity to quote Kermit the Frog: “it’s not easy being green.” The E3 framework may make it easier by providing smaller and mid-size manufacturers tools they might not find on their own, to improve their own operations and to make them more attractive as both investment opportunities and as suppliers to larger companies that are themselves working to green their own supply chains.