No “Summer Slow-Down” for Manufacturers – Regulatory Changes Continue


Readers of this space may recall my recent posts highlighting court and legislative changes to employment laws, regulations and policies affecting manufacturers.  See e.g. “‘Manufacturing’ Law: Courts Also Move to Fill the Void,” “INTERESTING UPDATE: ‘Manufacturing’ Law: Courts Join the States to Fill the Void,” and “The DOL Seeks to Change the Tide.”  While Congress may have taken August off for vacation, local governments have not.  The breathtaking speed by which long-established practices are being challenged and changed has not slowed down.  Two examples help to make this point.

On July 19, San Francisco adopted the “Parity in Pay Ordinance” prohibiting covered employers from either asking about an applicant’s salary history or considering an applicant’s salary history when deciding whether to hire and what salary to offer.  Effective January 1, 2018, San Francisco becomes another jurisdiction to adopt a salary history inquiry ban.

These local bans on salary history require hiring officials to dramatically change their practices.  What once may have been a routine question (“how much did you make in your last job and how much do you need to be paid to work for me”) becomes a legal minefield – legal or illegal depending on the status of the interview-application process.  San Francisco’s ban prohibits a manufacturer from considering salary history, even when the applicant spontaneously offers it.  So, if during the interview the applicant discloses that she or he earned a six-figure salary in the prior job and the manufacturer’s proposed salary range was capped at a far lower amount, the likelihood that the applicant would either reject the offer or accept it only until the next opportunity cannot be considered.

The New York City Department of Consumer Affairs published new regulations under the “Freelance Isn’t Free” Act, rules which became effective on July 24.  Among other things, those rules prohibit freelance employees from prospectively waiving rights under the Act, ban prohibitions on bringing an action in court to enforce the individual’s rights, and otherwise ban waivers of the right to bring class or collective actions.  Any provisions in conflict with these rules are automatically void and unenforceable.

These changes may require the wholesale modification of standard independent contractor or freelance agreements.

As I have noted before, the rapidly changing landscape requires manufacturers pay close attention to changing standards in their jurisdictions.  Every individual involved in the hiring process, whether in HR or not, should become familiar with applicable local rules.

TSCA Implementation Update: EPA Finalizes Framework Rules and Announces Scope For First Risk Evaluations


Thank you to my colleague, Emilee Mooney Scott, for this post. Emilee is an associate in our Environmental & Utilities Practice Group.

TSCA Framework Rules Promulgated

As we outlined last year, the Toxic Substances Control Act (“TSCA”) was recently updated to provide EPA with much broader authority to regulate “existing” chemical substances (i.e., those that are already in use in commerce).  EPA’s review of existing chemical substances under its new TSCA authority will follow these three steps: 1) Prioritization; 2) Risk Evaluation; and 3) Risk Management (as we explained in further detail in December).

On July 20, 2017, EPA issued the final rules on the Prioritization and Risk Evaluation processes.  Notably, the final rule specifies that when EPA conducts a risk evaluation, it will not evaluate all possible conditions of use, but will instead focus on the conditions of use that raise the greatest potential for risks.  This will conserve agency (and industry) resources by limiting the need for data and analysis on conditions of use that are uncommon or risks that are remote.

Risk Evaluations Underway

The TSCA reform bill also directed EPA to identify a slate of ten substances that would skip the prioritization step and proceed directly to the risk evaluation step.  EPA recently published the risk evaluation scope for each of these first ten substances.  EPA has opened a docket for each substance, and will accept comments on risk evaluation scopes until September 19, 2017.  The table below provides links to the risk evaluation scopes (and any supporting documents), the use and exposure pathways and hazards identified by EPA, and the docket that interested parties may use to leave comments.

Substance Use and Exposure Pathways Hazards Docket
1,4-Dioxane Used in consumer products. Present in groundwater, ambient air and indoor environments.  High reported releases to the environment. Possible human carcinogen. EPA-HQ-OPPT-2016-0723
1-Bromopropane Used in consumer products. Present in drinking water, indoor environments, surface water, ambient air, groundwater, soil. Estimated to have high releases to the environment. Possible human carcinogen. EPA-HQ-OPPT-2016-0741
Asbestos Used in chlor-alkali production, consumer products, coatings and compounds, plastics, roofing products, and other applications. Also found in certain imported products such as brakes, friction products, gaskets, packing materials and building materials. Known human carcinogen; Acute and chronic toxicity from inhalation exposures. EPA-HQ-OPPT-2016-0736
Carbon Tetrachloride Used in commercial/industrial products. Present in biomonitoring, drinking water, indoor environments, surface water, ambient air, groundwater, soil. High reported releases to the environment. Probable human carcinogen. EPA-HQ-OPPT-2016-0733
Cyclic Aliphatic Bromide Cluster (HBCD) Flame retardant in extruded polystyrene foam, textiles, and electrical and electronic appliances Acute aquatic toxicity EPA-HQ-OPPT-2016-0735
Methylene Chloride Used in consumer products. Present in drinking water, indoor environments, ambient air, groundwater, and soil Probable human carcinogen EPA-HQ-OPPT-2016-0742
N-Methylpyrrolidone (NMP) Used in consumer products. Present in drinking water and indoor environments. High reported releases into the environment. Reproductive toxicity. EPA-HQ-OPPT-2016-0743
Pigment Violet 29 Used in consumer products. Estimated to have moderate releases to the environment. Aquatic toxicity. EPA-HQ-OPPT-2016-0725
Trichloroethylene (TCE) Used in consumer products. Present in drinking water, indoor environments, surface water, ambient air, groundwater, and soil. Probable human carcinogen. EPA-HQ-OPPT-2016-0737
Tetrachloroethylene (perchloroethylene) Used in consumer products and dry cleaning. Present in biomonitoring, drinking water, indoor environments, ambient air, groundwater, soil. High reported releases to the environment. Probable human carcinogen. EPA-HQ-OPPT-2016-0732

In December 2016 and January 2017 EPA also issued proposed rules that would 1) ban the use of TCE in aerosol degreasing and spot cleaning; 2) ban the use of TCE in vapor degreasing; and 3) ban the use of methylene chloride and NMP in consumer and most commercial coating removal products.  These rules have not yet been finalized, and the new administration has repeatedly extended the comment deadlines.

While the proposed TCE rules face an uncertain fate, they do potentially forecast how risk evaluations might proceed.  The proposed TCE rules do not include any restrictions on what is presently the most common use of TCE in the United States: as a precursor in refrigerant manufacturing.  When TCE is used in refrigerant manufacturing, the use occurs in a closed system with very limited potential for worker exposure or releases to the environment.  In other words, when a discrete use of a high-priority substance poses little risk, it may be allowed to continue even in the face of a total ban on other uses.  Manufacturers aware of such low-risk uses should take advantage of opportunities for public comment to make sure EPA is aware as well.

The False Claims Act: Why It Is Relevant To All Manufacturers

This week, we are pleased to have a guest post from Kevin Daly.  Attorney Daly is a member of the firm’s Manufacturing Industry Group and also its Trade Compliance Team. 

The False Claims Act (FCA) is a major civil enforcement tool used by the federal government to redress fraud causing monetary loss to the government.  In the 2016 fiscal year, the federal government recovered over $4.7 billion in FCA judgments and settlements.  While in the manufacturing sector it most frequently affects government contractors, its reach can be broader and it is a statute that all manufacturers should be aware of.


The FCA is a civil statute that prohibits presenting false or fraudulent claims for payment to the federal government, or causing the presentment of such claims.  The law also prohibits making, using or causing to be made or used a false statement to conceal or avoid paying an obligation to the government.


The FCA permits private citizens with knowledge of alleged FCA violations to enforce the statute by suing alleged wrongdoers on the government’s behalf and sharing in the government’s monetary recovery if successful.  The majority of FCA lawsuits are brought by these private “relators”; the government may bring FCA lawsuits itself but such direct enforcement actions are relatively rare.  The FCA’s “qui tam” provision authorizing suits by private relators is a potentially lucrative mechanism for whistleblowers (who could be current or former employees, customers or others in a business relationship, or competitors) who believe that a company has defrauded the government.  Companies or individuals found to have violated the FCA are liable for treble damages plus civil penalties of $10,957 to $21,916 per violation.  (These penalties are adjusted annually to account for inflation).


The potential for FCA liability is present for manufacturers that sell directly to the federal government, and, in some instances, even to manufacturers with no government contracts.

The FCA was first enacted during the Civil War to provide a remedy against suppliers who defrauded the government in selling supplies to the Union Army.  The FCA is still used to address such “procurement fraud” cases today.  These cases often involve overcharging the government by, for example, charging for substandard goods, providing goods less expensive than what was ordered and billed for, overcharging for a product, or billing for a higher quantity of good than what was provided.  Additionally, the FCA is used to enforce compliance with contractual provisions and statutory and regulatory requirements governing government contractors.  These cases rely on the theory that, by submitting a claim for payment, a contractor expressly or impliedly represents that it is in compliance with the applicable requirements.  Most courts have permitted the government to bring FCA cases on this theory.  For these reasons, FCA risk is particularly present in manufacturing sectors that rely on purchases by the federal government, such as military equipment.


Even manufacturers that do not do business with the federal government directly can face FCA liability if their downstream customers bill the federal government.  For example, the single largest sector for FCA enforcement is the healthcare industry.  The government has used the FCA to enforce regulatory requirements applicable to pharmaceutical and medical device manufacturers, such as FDA marketing regulations and the anti-kickback statute.  These manufacturers can face FCA liability, even though in most cases they do not bill government health care programs directly, on the theory that the manufacturer has caused a pharmacy, hospital, or other provider to submit a false claim when the manufacturer violates these statutes and regulations.

Additionally, even companies with no relationship to the federal government can face FCA liability in certain situations.  Recently, some relators have brought FCA lawsuits against companies that have allegedly made false statements in customs paperwork.  These cases allege that, because the FCA prohibits making false statements to avoid paying an obligation to the government, false statements that reduce the import duty owed (e.g. by misstating the country of origin of the goods, the value of the goods, or the nature of the goods) violate the FCA.  Manufacturers that produce their goods overseas or import materials from overseas could face lawsuits of this nature.

The FCA is a technical, rapidly evolving area of the law.  It carries the potential to affect manufacturers a variety of sectors, in some instances even without a direct relationship to the federal government.

The DOL Seeks to Change the Tide

While local state and city governments have been working to expand the scope of workplace protections, the Federal government has begun “undoing” some of the aggressive advancements of the Obama Administration.

On June 7, the Department of Labor (DOL) announced in a brief statement that it was withdrawing two significant guidance documents – one with respect to JOINT EMPLOYERS and the other dealing with INDEPENDENT CONTRACTORS.

The Joint Employer Guidance sought to expand the circumstances under which one business could be held responsible for the employment, labor and civil rights liabilities of a separate, but related second business.  The DOL Guidance sought to expand worker protections and the ability to collect remedies from parent corporations (when liability was imposed as a result of the acts of a subsidiary) or franchisors (when liability was imposed as a result of the actions of a franchisee).  The now repealed guidance suggested that such liability could be imposed whenever the related-entity exerted “indirect” control over the labor and employment actions of the another entity even if such power was not exercised, a common claim when faced with parent-subsidiary or franchise agreements.  The DOL now returns to the previous standard that such liability can only be imposed on a business which has “direct control” other the business found to be liable.

DOL also withdrew its guidance on Independent Contractors.  Under the now withdrawn guidance, the DOL had taken the position that “most” independent contractors were really “employees” under the common law.  As a result, the DOL had taken the position that such workers were entitled to minimum wage and time-and-a-half for overtime.  The DOL did not address the impact (if any) the withdrawn guidance would have on a much-publicized Federal-State Worker Misclassification Initiative.  Under that initiative, believing that the misclassification of workers had a substantial negative impact on the collection of state and federal payroll and other taxes, 37 states partnered with DOL to share data and take steps to increase collection efforts.  The future of the initiative seems uncertain.

Given the budgetary pressure faced by state and local government, the DOL’s action may have limited immediate impact on collection efforts.  Yet, manufacturers and other employers have a better chance defending these “misclassification cases” now that the DOL appears to have taken a more traditional view.

The Year of Change continues.

Superfund Changes Afoot

Since taking over as EPA Administrator, Scott Pruitt has made it clear that he intends to focus on—and overhaul—the Superfund program. Calling the program “at the center of the Agency’s core mission”, Pruitt has put in place a couple of initiatives in an effort to streamline and improve the Superfund process and cleanups. In addition, industry groups have weighed in with their own ideas for how to improve the program. These changes and recommendations are summarized below.

Delegation of Authority for Superfund Remedies Estimated at $50 Million or More

On May 9, 2017, Administrator Pruitt issued a memorandum delegating authority for approval of Superfund remedies estimated to cost $50 million or more to the Administrator. The stated purpose of this delegation is to create efficiency and consistency for large, expensive Superfund sites. EPA employees are directed to get the Administrator’s office involved in these sites as early as possible and throughout the remedy evaluation process to ensure efficiency.

While the purpose of the delegation is efficiency, questions remain about how the delegation will work in practice. Oftentimes, a cost estimate for remediation is not developed until well into the Superfund process, so it is unclear how early the Administrator’s office will get involved on these sites. In addition, what will happen to sites with a remedy estimated at more than $50 million that were approved before the memo took effect? We can likely expect potentially responsible parties to seek the Administrator’s input on these remedies.

Task Force for Superfund Restructuring

On May 22, 2017, Administrator Pruitt convened a task force to provide recommendations on how to restructure and improve the Superfund cleanup process. The task force is directed to consider the following issues:

  • Streamlining and improving protections such as bona fide prospective purchaser status, “comfort letters”, and prospective purchaser agreements.
  • Developing non-traditional approaches for financing cleanups.
  • Reducing EPA administrative/oversight costs.
  • Streamlining and improving remedy selection at sediment sites.
  • Improve stakeholder involvement (state and local governments, public-private partnerships).

The task force’s recommendations are due by June 21, 2017. It remains to be seen what the task force will conclude, but given the issues to be addressed, we can expect some recommendations that could benefit potentially responsible parties at these sites.

Industry Requests for Regulatory Reform

A number of industry groups recently offered EPA their own suggestions for how to improve the Superfund program. Some of the suggestions include:

  • Relaxation of conservative exposure scenarios in risk assessment.
  • Consideration of future land use in developing remedial alternatives.
  • Reformation of agency oversight cost policy to incorporate a concept of reasonableness.
  • Limitations on EPA review time for documents.
  • Adoption of a third-party licensed site professional program.

Given the focus on the Superfund program and the overall goal of streamlining the process, it is certainly possible that some of these ideas could be championed by this Administration.


INTERESTING UPDATE: “Manufacturing” Law: Courts Join the States to Fill the Void

In a May 16 Blog Post, I reviewed several cases dealing with the question of whether Title VII’s ban on discrimination “because of . . . sex” included a ban on discrimination “because of sexual preferences.”  I summarized three recent decisions by the United States Courts of Appeal – the Eleventh Circuit holding Title VII did not ban such discrimination, the Second Circuit reaching the same conclusion but criticizing that view in a case called Christiansen v. Omnicom Group Inc. (March 27, 2017), and the Seventh Circuit being the first Circuit Court to reach the opposite conclusion in a case called Hively v. Ivy Tech Community College (April 4, 2017).  I also noted that a court under the Second Circuit elected to follow the Seventh Circuit’s Hively decision, rather than the Second Circuit’s Christiansen decision.  I suggested that the “speed in which these decisions were issued could herald a major shift in the law.”

Now comes word that on May 31, 2017, the Second Circuit Court of Appeals may be reconsidering its Christiansen holding, albeit in a different case.  In a case called Zarda v. Altitude Express, Inc., Docket No. 15-3775, the Second Circuit invited the Equal Employment Opportunity Commission (“EEOC”) to participate as “a friend of the court” and present its views as to whether Title VII bans discrimination on the basis of sexual orientation.  The EEOC is the primary federal agency enforcing Title VII.  You can read the Court’s order here, and view an unusual letter the Clerk of the Court sent to the Acting Solicitor General of the United States here alerting the government to the case and the deadline for filing a brief.  (While the letter has a January 14, 2016 date on it, the letter was entered on the Court docket on May 31, 2017 and, thus, the date of the letter seems to be in error.)

What position will the EEOC take on the issue?  We cannot be sure at this stage.

In the Christiansen case, the EEOC filed a friend of the court brief arguing that VII was broad enough to prohibit sexual orientation discrimination.  Yet, the Trump Administration may have an entirely new view.  We do not know at this stage because President Trump has yet to nominate a new Solicitor General or had much of an impact on EEOC policy-making.  On one hand, the U.S. Census Bureau deleted a question asking about sexual orientation from the 2020 census.  On the other hand, the White house has been otherwise silent on the issue.

If the EEOC elects to participate, its brief is due to be filed by June 26.  Many will be watching.

Patent Litigation Development for Manufacturers: U.S. Supreme Court Limits where Corporations can be Sued for Patent Infringement

This week, we are pleased to have a guest post from James Nault, a patent attorney and member of Robinson & Cole LLP’s intellectual property litigation group.

The United States Supreme Court just limited where corporations can be sued for patent infringement in a case called TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341 (U.S. May 22, 2017).  Manufacturers sued for patent infringement are now more likely to fight those fights in their home venues.

Case Background

Kraft sued TC Heartland, an Indiana-based and incorporated manufacturer of flavored drink mixes, for infringement of one of Kraft’s patents in the federal district court in Delaware.  TC Heartland moved the court to either dismiss the case or to transfer it to a federal district court in Indiana, which the Delaware court could have done.  But the court refused to do so, citing a case from the U.S. Court of Appeals for the Federal Circuit, which hears all patent appeals, which held 30 years ago that a corporation can be sued for patent infringement wherever it is subject to personal jurisdiction.

A complete discussion of all of the rules regarding personal jurisdiction is beyond the scope of this post, but basically because TC Heartland regularly shipped it products into Delaware, the court ruled that they could be sued there, which comported with the Federal Circuit’s rule.  TC Heartland appealed to the Federal Circuit, asking them to order the district court to transfer the case to Indiana, but the Federal Circuit refused.  So TC Heartland petitioned the Supreme Court to take the case, which they did.

The Supreme Court’s Opinion

The Supreme Court, in a unanimous opinion authored by Justice Clarence Thomas, reversed the Federal Circuit and held that the rule the Federal Circuit had announced 30 years ago, which greatly broadened where a corporation could be sued, is wrong.  Justice Thomas cited a 60-year-old U.S. Supreme Court case called Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), which had definitively interpreted the special federal statute governing venue in patent infringement actions to mean what it says, which is that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business” [note:  a corporate defendant can also be sued in a venue if it consents to being sued there].

The Federal Circuit had held, using a separate statutory section governing venue generally, that where a corporation resides is wherever it is subject to personal jurisdiction, basing that holding on amendment to the general venue section.  But the Supreme Court has now rejected that idea, holding that where a corporation resides is only where it is incorporated.

That rejection was foreshadowed by Chief Justice Roberts at oral argument when his first question to Kraft’s counsel of record was “Is Fourco still good law?”  In other words, if Fourco is still good, then the Federal Circuit’s contrary rule could not be right.  TC Heartland’s Counsel of Record Jim Dabney had argued that Fourco is indeed still good law, and that an amendment to the general venue section could not alter the more specific patent venue section, and the Supreme Court has now agreed.

Why it Matters for Manufacturers

This case is important for manufacturers because the Federal Circuit’s expansive broadening of where a corporation could be sued for patent infringement meant that corporations were often sued far away from their headquarters state or where they were incorporated.  It also made possible the rise of the Eastern District of Texas, now the most popular venue for patent infringement actions in the country [a place where our firm has defended clients on several occasions], which has plaintiff-friendly special patent rules which make out-of-state defendants particularly vulnerable.  TC Heartland should return much patent litigation back to where a manufacturer is incorporated or where it has its major manufacturing center, i.e. on its home turf.

“Manufacturing” Law: Courts Also Move to Fill the Void

Last month, I wrote that in the absence of significant Congressional action on the labor and employment front, states and cities are increasingly willing to take steps to improve employment protections.  Some courts appear willing to join in – challenging longstanding precedent and finding protections and safeguards not previously recognized.

Four separate decisions in the span of 54 days demonstrate this trend.

The landmark Civil Rights legislation of the 1960’s, Title VII of the 1964 Civil Rights,  banned discrimination on the basis of race, color, religion, sex or national origin.  Title VII did not expressly ban discrimination on the basis of sexual orientation or trans-gender status.  While some state discrimination laws prohibited discrimination against gays and lesbians, virtually every court to look at the issue held that Federal law did not.  Typical of such decisions was the holding of the Eleventh Circuit Court of Appeals in Evans v. Georgia Regional Hospital (March 10, 2017).

Seventeen days after the Eleventh Circuit’s Evans decision, the Second Circuit Court of Appeals reached similar conclusion as “binding” precedent, but strongly criticized it.  Christiansen v. Omnicom Group Inc.  (March 27, 2017).  Eight days after Christiansen, the Seventh Circuit addressed the issue in Hively v. Ivy Tech Community College (April 4, 2017) and concluded that discrimination on the basis of sexual orientation was no less discriminatory than discrimination on the basis of gender.  Finally, a month later, a lower New York federal district court followed suit, holding that Title VII banned sexual orientation discrimination.  See Philpot v. State of New York, et al.(May 3, 2017).

The dizzying speed in which these decisions were issued could herald a major shift in the law – or not.  We likely will not know the outcome until the United States Supreme Court resolves the issue.  Until then, manufacturers seeking to stay compliant with the challenging legal landscape should conduct periodic reviews of workplace policies and err on the side of caution.

“Take-Home Toxins” Expand Duty of Care Imposed on Employers

Thank you to my colleague, Diana Neeves, for this post. Diana is an associate in our Environmental & Utilities Practice Group.

A federal district court in Pennsylvania recently found that Accuratus Corporation (“Accuratus”), a ceramics manufacturer and supplier, could be liable under New Jersey law for chemical exposure injuries to the girlfriend and roommate of an Accuratus employee.

Ms. Schwartz dated an Accuratus employee between 1978 and 1980 and lived with this employee for some time in 1980. She allegedly suffers from chronic beryllium disease, which she believes was caused by exposure to beryllium brought home by her boyfriend.

The law governing employers’ liability for injuries caused by exposure to toxins brought home by workers varies by state and has typically been limited to liability for injuries to a worker’s spouse, a “foreseeable victim.” Although state courts have been more apt to recognize the employer’s duty to prevent take-home exposures in recent years, others continue to reject this extension of liability.

Previously under New Jersey law, take-home exposure liability was construed somewhat narrowly in light of concerns about “considerations of fairness and policy” and “limitless exposure to liability.” For instance, in Olivo v. Owens-Illinois, Inc., the New Jersey Supreme Court found that Exxon Mobil Corporation owed a duty to its employee’s spouse “based on the foreseeable risk of exposure from asbestos borne home on contaminated clothing” and the typicality of a wife “laundering the work clothes worn by her husband.”

In 2016, after the initial dismissal of Ms. Schwartz’s case and her subsequent appeal, the New Jersey Supreme Court reviewed whether the employer’s duty set forth in Olivo could extend beyond the employee’s spouse. The Court held that it could, noting that, while this duty has never been extended outside the context of an employee’s household, the class of persons to which the duty may be extended need not be categorically defined. Instead, the Court called for a case-by-case analysis that considers the relationship of the parties, the opportunity for and nature of the exposure, and the employer’s knowledge of the dangerousness of exposure.

Applying this analysis on remand, the federal district court found that the nature of beryllium as a toxin “known to travel on clothes to workers’ homes [that] can remain dangerous in the home for some time, and importantly, can cause serious damage with only minimal exposure,” taken together with the relationships of the parties in this case, was sufficient to generate a duty. In so finding, the Court explained:

“As a simple fact of human life, an employer must reasonably foresee that virtually all of its employees live with or have repeated close contact with someone, unless there is good reason to believe that its employees are disproportionately hermits and loners… [And this] reality means it may be reasonably foreseeable to a Defendant employer working with a particularly insidious toxic substance that material carried home on an employee’s clothes may harm someone at that home who is a frequent overnight guest and romantic partner or roommate sharing living space and housework.”

This case serves as a reminder to manufacturers that their duty of care may extend beyond their own employees. In order to satisfy that duty of care, manufacturers undoubtedly will consider the materials used and the universe of potential exposures to those materials in developing an appropriate protocol to ensure that workers—and anyone with whom a worker may have close contact—are protected.

The case is Schwartz v. Accuratus Corporation, Civil Action No. 12-6189 (E.D. Pa., Mar. 30, 2017).

States (and Cities) Rush In Where Congress Fears to Tread

Some manufacturers may interpret the “Epic Fail” of Congress to repeal the Affordable Care Act as a sign of stability in the labor and employment landscape.  After all, one thing which the new Administration and Congressional Republicans had in common was their seven-year pledge to repeal “Obamacare.”  When compared to the divergent views on other controversial measures – minimum wage, overtime regulations, and the overhaul of the tax code – repeal of the ACA looked like “low hanging” fruit.  The failure to pick that plumb suggests reform of federal employment and labor laws will not occur anything soon.

But cities and states appear willing to act in areas where Congress may not be able.  This “patchwork” of local standards threatens to make the task of compliance by manufacturers and others a full-time job.

For example, New Jersey is considering an amendment to the state’s paid leave law to expand the scope of benefits.  Because the state pays covered employees through its insurance system, funded by employee contributions, the adoption of this amendment likely will not impact manufacturers directly.  The same cannot be said for two proposed New Jersey bills (one in the State Assembly and one in the State Senate)  which would make it unlawful to take adverse employment action against employees for their use of medical marijuana

Similarly, Texas adopted a state law prohibiting employers from considering an applicant’s credit history unless that history is substantially related to employment.

States are not the only entities taking action to expand employee protections in the absence of federal legislation.  The City of Los Angeles recently adopted new regulations restricting the use of criminal arrest and conviction records.  The Los Angeles regulations mirror the approach adopted by the Federal Equal Employment Opportunity Commission (and possibly could have been adopted in anticipation of a change in federal law).  The City of Seattle adopted the “Secure Schedule” Ordinance – a complex regulation requiring covered employers (retail establishments employing 500 or more employees anywhere and full service restaurants employing 500 or more employees and hosting 40 or more locations anywhere) to provide good faith estimates of work schedules, engage in an “interactive process” when scheduling employees, and offer additional hours to current employees before hiring others.  While less complex and burdensome, the City of San Jose adopted its own “Opportunity to Work” Ordinance.  Covering employers employing 35 or more employees within the city, the Ordinance requires employers to offer additional work hours to current employees before hiring additional persons (including subcontractors, staffing agencies or temporary services agencies).

Manufacturers should be cognizant of proposed legislation at the state and local level.  Manufacturers with operations in multiple jurisdictions need to be especially vigilant as their HR policies could get caught up in a increasing complex web of local regulation.