While the pandemic may be behind us, many employees in manufacturing workplaces who worked on the front lines during the last few years, may be having difficulty remaining engaged at work and satisfied with their job. Whether it is called the “employee experience,” “employee satisfaction,” or “employee engagement” – this concept generally means the amount of their energy that employees are willing to invest in their work and workplace.  Regardless of what you call it, it is far more than a personnel issue, it directly impacts retention, attrition, productivity, safety in the workplace, and ultimately the “bottom line.”  So where should manufacturers start in taking the temperature of workers  and their satisfaction?

First, manufacturers should consider gathering information about the current level of employee engagement. This can be done through formal channels such as employee engagement surveys and focus groups but also through informal conversations with stakeholders (e.g., town hall meetings, small group meetings, etc.). There are a number of vendors who offer surveys, many of which can be tailored, or such surveys can be conducted by internal personnel. For manufacturers who may not have the resources to conduct a formal survey or assessment, engaging in discussions around several standardized inquiries to diverse stakeholders at all levels of the organizations can also provide insight into the status of employee engagement. In addition, metrics for key data points may also be helpful in providing insight into the workplace including: turnover and attrition rates, employee use of various benefits, safety incidents, absences, use of vacation, and similar data.  In this phase, the information solicited should help in answering the following kinds of questions:

  • What makes our employees feel valued?
  • Do employees feel their work is important?
  • Do employees perceive salary and benefits as fair?  What about competitive?
  • Do our benefits actively reflect trends and needs of our employees?  For example, if we know that employees value flexibility, are we providing that and if not, should we be?
  • How do we recognize employees and how is it being received by them?
  • Do employees believe they “fit in” at work and why?
  • Are we providing the right support to employees including personnel, tools, equipment, and a safe work environment?  Are there barriers to our employees feeling comfortable?
  • Do we have a mechanism for inviting dialogue with employees and are they using it? If not, how can we improve that?
  • According to the data gathered, how are we doing? Where do we need to improve?

Second, manufacturers should review the information received. If reliable data is obtained, employers will be able to understand the current status of engagement and the answers to questions such as those listed above. When surveys are conducted using a vendor and/or electronic platform, companies may be provided with a certain degree of analysis beyond aggregation of results, that may also prove helpful. Depending on how the data is gathered, it will need to be analyzed by the company to understand what the data is showing.

Third, key decisionmakers and stakeholders should determine the priorities and goals and then craft a plan to best attain those goals. Plans should be focused on tangible action items and the steps needed to perform each item. Ideally, one person or several people take ownership for implementation of the plan, the individuals are held accountable for working toward the goals in the plan, and the company is updated on its progress with regularity. Investing in this third step, at the highest level of the organization, is critical to the successful implementation of a plan to increase employee engagement.

While 2023 may be a year of rebuilding the workplace in various industries, for manufacturers, it may be an opportunity to gain valuable insight into the workplace and into employees, many of whom worked through a tumultuous and difficult several years.

This week’s post was co-authored with Edward Heath and Kevin Daly.  Attorneys Heath and Daly are members of Robinson+Cole’s Manufacturing Industry Team and regularly counsel clients on trade compliance, anti-corruption compliance, and other corporate compliance issues.

On the one-year anniversary of the invasion of Ukraine, the Biden administration has announced a series of additional sanction measures targeting Russia. These new sanctions are designed to further isolate Russia from goods and services that aid its war effort and to punish sanctions evaders.  These new measures will affect manufacturers of goods that are used in targeted industry sectors, including their business with certain customers outside of Russia.

Specifically, the White House has announced the following categories of new sanctions measures:

  • The U.S. Treasury and State Departments will impose sanctions against over 200 new companies and individuals in Russia and elsewhere. The list will include 12 Russian financial institutions and actors connected to Russia’s defense and technology sectors.
  • The U.S. Commerce Department will add nearly 90 Russian and third-country companies to its Entity List as sanctions evaders. This measure will prevent them from getting access to some or all U.S. exports.
  • The U.S. Commerce Department also will impose new export controls on industrial machinery, luxury goods, and drone components. These measures include:

    – Over 300 additional industrial items will now require a license for export to Russia or Belarus;

    – Over 250 types of additional luxury goods will now require a license for export to Russia or Belarus or to sanctioned individuals;

    – Expanded restrictions will be imposed on the oil, gas, and chemical sectors to better align with restrictions set by U.S. allies; and,

    – Expanded restrictions will be imposed on drone components to prevent them from reaching Iran. (To date, U.S.-manufactured parts have been found in Iranian drones used by Russia in conducting the war in Ukraine).
  • The U.S. will expand its authority to sanction Russia’s metals and mining sectors. This authority will permit OFAC to add companies and individuals operating in these industries to sanctions lists.
  • The U.S. will increase tariffs on Russian metals, minerals, and chemical products.
  • The U.S. and its G7 allies will create a coordinated enforcement mechanism to address sanctions evasion. The U.S. will chair this mechanism in the first year.

Other G7 nations are expected to announce parallel measures.

Some of these measures have already been implemented. The Commerce Department has already promulgated rules implementing the additions to the entity list and the new export controls regarding drone components, luxury goods, and industrial items. Additionally, OFAC has implemented the additions to its sanctions lists.

Other measures have not yet been fully implemented. For example, it remains to be seen how OFAC will exercise its new authority to sanction the Russian mining and metals sectors. Additionally, the scope and operations of the G7 coordinated enforcement mechanism will develop over time as it is created and implemented.

When considering these additional sanctions, it is essential to recognize that more transactions and business relationships which were once routine (or considered beyond the reach of 2022’s sanctions) must now be thoughtfully assessed. The risk is not only limited to manufacturers of the types of goods that are the focus of the industry- and product-specific sanctions. Given the number of new companies and individuals designated as blocked by these new measures, all manufacturers face the need to sufficiently scrutinize their business relationships.

As the war in Ukraine rages on, it is likely that the sanctions landscape will continue to evolve. In particular, sanctions measures are likely to increasingly reach certain third-country activity as the U.S. and its allies continue to focus on sanctions evaders and activity in third countries that aids Russia’s conduct of the war. As a result, manufacturers (particularly those in heavily affected industries such as defense, industrial, energy, and high technology sectors) may wish to actively monitor developments in order to timely assess the impact of new measures on their operations.

With the assistance of experienced legal counsel, diligence policies can be implemented that are comprehensive, yet right-sized to a company’s risk profile, to assess and manage sanctions risk.  A first step in such a review is refreshing screening protocols for customers, suppliers, vendors, and other business partners to ensure that no sanctioned parties are present. Continued refreshing of this screening is likely to be needed as the list of sanctioned parties expands. Additionally, manufacturers can assess the impact of the new export controls on luxury goods and industrial products by reviewing the specific lists of products issued by the Commerce Department to evaluate the impact on their particular product lines. Furthermore, as sanctions evolve, know-your-customer diligence takes on added importance. Asking about the end use, end user, and ultimate destination of exported products, and being attentive to any red flags presented, may help identify potentially problematic transactions before they are consummated and constitute a violation.  

At the end of March, a new OSHA policy will go into effect expanding penalties for instance-by-instance (IBI) citations. The move signals OSHA’s stated commitment to increased enforcement in 2023 and beyond.

IBI citations are those for which OSHA could issue multiple citations, with corresponding penalties, for each instance of alleged non-compliance—separate penalties for each machine, each location, each entry, each employee. Under OSHA’s prior policy, which has been in place since 1990, OSHA would only apply IBI penalties for willful citations. Under the new policy, which goes into effect on March 27, the IBI policy will now apply to high-gravity serious violations for the following areas:

  • Falls
  • Machine guarding
  • Respiratory protection
  • Lockout tagout
  • Permit required confined space
  • Trenching
  • Other-than-serious violations specific to recordkeeping

In deciding whether to apply the new IBI policy, OSHA will consider certain factors, such as:

  • Whether the employer has received a willful, repeat, or failure to abate violation within the past five years;
  • Whether the employer has failed to report a fatality, inpatient hospitalization, amputation, or loss of an eye;
  • Whether the proposed citations are related to a fatality/catastrophe; and
  • Whether the proposed recordkeeping citations are related to injury or illness(es) that occurred as a result of a serious hazard.

OSHA intends to use the new IBI policy to deter employees from maintaining or failing to fully abate certain violations and hopes that it will encourage employers to be proactive in preventing workplace fatalities and injuries.

In today’s world, employees spend increasingly more time at work, including in the manufacturing industry where jobs are generally not remote.  This means that employees may have close working and personal relationships with each other, such as dating and romantic relationships as well as friendships.  Such relationships, between peers, employees and supervisors, or even employees and individuals affiliated with the company, can create workplace issues and legal risks if not managed properly.  Therefore, manufacturers should ensure that they have adopted policies and procedures to adequately address such issues and mitigate the associated risks.

First, manufacturers should implement and update policies regarding workplace relationships, including policies addressing dating and romantic relationships as well as fraternization, familial relationships, and nepotism.  Such policies can be narrow or broad in scope and application, which may depend on the particular workplace and employee population.  Such policies should be uniformly applied to all employees and clearly address whether and what types of relationships are permitted, whether any relationships are prohibited and the reason for that position, whether relationships must or should be reported to human resources, and the consequences for failure to report.  For example, if a policy prohibits relationships between employees and supervisors, it should be clear about whether that includes all supervisors, only those in a direct reporting relationship to a particular employee, or those that could influence the employee’s terms and conditions of employment.

Second, manufacturers should ensure that their sexual harassment prevention policies are clear and up-to-date as well as their sexual harassment training programs.  Policies and trainings should be clear that unwelcome sexual advances will not be tolerated and should include examples such as repeated requests for dates, unwelcome gestures (e.g., giving of gifts or tokens of affection), among other such situations.  Furthermore, such policies should describe the legal theories of hostile work environment and quid pro quo harassment.  Quid pro quo harassment arises when someone in a position of power or authority (e.g., a supervisor) seeks sexual favors from an employee in return for a job benefit or to avoid an adverse action (e.g., demotion).  Strong policies and trainings that address workplace relationships are necessary because such relationships can create difficulties or complications in an employer’s ability to maintain a professional, respectful and harassment-free work environment; such relationships between supervisors and their direct reports can create a hostile work environment for others, feelings of favoritism or exclusion, and conflicts of interest, among other issues. 

Third, it is important for manufacturers to understand that when a relationship between employees ends or issues arise in the context of their relationship, it may impact the workplace and employers can be liable for failing to protect the employees involved. Therefore, it is important for employers to monitor such issues and take action when necessary to maintain a harassment-free work environment; in other words, once employers are on notice of such issues, they are involved and should act accordingly.

This week, we wrap up our forecast of annual trends with a focus on environmental, health, and safety issues that we expect many manufacturers may face this year.

1.  ESG Developments

Last year, we reported on the SEC’s Proposed Rule on Climate-Related Disclosures. The SEC is expected to finalize this rule in 2023, perhaps as early as March. The proposed rule is based in part on existing (but not mandatory) frameworks for climate-related disclosures, such as the recommendations of the Task Force on Climate-Related Disclosures, which some manufacturers might be familiar with – but not all. The proposed rule would require disclosures related to:

  • Governance of climate-related risks and relevant risk management processes;
  • How any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements ( in the short, medium, and long term);
  • How any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook; and
  • The impact of climate-related events and transition activities on the line items of a registrant’s consolidated financial statements.

Most notably, however, covered companies will be required to report greenhouse gas emissions metrics, both those generated by their own company and, for some, those generated from upstream and downstream activities in their value chain. If this requirement remains in the final rule, it will impose significant data gathering obligations that some companies are already grappling with despite the proposed nature of the rule. 

Meanwhile, the SEC has stepped up scrutiny of climate-related and environmental disclosures under its existing rules and guidance. The SEC has issued letters to registrants asking for more information on filings and has even filed lawsuits against registrants based on alleged ESG deficiencies. All signs point to increased activity in 2023.

As has consistently been the case, the European Union seems to be a few steps ahead of the United States in requiring ESG-related disclosures. As an example, in late 2022, the EU passed the Corporate Sustainability Reporting Directive (CSRD), which will require covered companies to report on a variety of ESG topics, such as pollution and climate change. The CSRD will apply not only to companies in the EU, but also to non-EU companies with a significant presence there (annual generation of $150 million or more). And, while companies may use foreign sustainability reporting standards as a stand-in for the CSRD standards, the reporting requirements in the SEC proposed rule will not likely suffice.

In the midst of all of these reporting obligations, government agencies and the public alike will continue to scrutinize corporate greenwashing claims. Many companies have found themselves in the crosshairs – and the courtroom – when they can’t back up their environmental or sustainability claims. Greenwashing claims are having real consequences on companies in the form of reputation, litigation, and reporting risk. And while all of these new reporting standards are aimed, at least in part, to curtail greenwashing, with ever-increasing stakeholder awareness of ESG issues, greenwashing issues are likely to remain on the minds of manufacturers for the foreseeable future.

2.  Increased OSHA Enforcement

Manufacturers can expect OSHA to increase inspections and enforcement in 2023. One noteworthy change that took place at the end of 2022 was an expansion of OSHA’s Severe Violator Enforcement Program (SVEP). Under this program, OSHA prioritizes – and publicizes – certain employers for inspections and enforcement based on criteria regarding the severity of their safety record. In late 2022, OSHA expanded the SVEP to cover even more employers. Now, an employer may find itself on the severe violators list if it meets at least one of the following criteria: 

  • A fatality or catastrophe inspection where OSHA finds at least one willful or repeated violation or issues a failure-to-abate notice if directly related to an employee death or three or more hospitalizations;
  • An inspection where OSHA finds at least two willful or repeated violations or issues failure-to-abate notice based on a high gravity serious violation; or
  • Egregious situations (e.g., extensive violation history, bad faith, intentional disregard for health and safety).

Employers that find themselves in the SVEP will be subject to follow-up inspections at the facility in question. OSHA will also conduct inspections at related worksites if it has reason to believe that there could be a broader pattern of non-compliance.

Once an employer is part of the SVEP, it will remain on the list for at least three years. However, if an employer will agree to an enhanced settlement that includes, among other things, implementation of a safety and health management system, it may be able to exit the SVEP after two years.

Expansion of the SVEP is just one way we can expect to see increased OSHA activity in 2023. Companies that find themselves outside the SVEP may also see increased inspection and more aggressive enforcement as we move through the year, and beyond.

3.  PFAS

Are you sick of hearing about per-and polyfluoroalkyl substances (PFAS) yet? I hope not. The theme for PFAS in 2023 is more everything – more science, more investigation, more regulation, more litigation. More from the federal government, the states, the courts, the community, and your counterparts in a transaction. A couple of noteworthy highlights – first, EPA proposes to designate PFAS as a national enforcement initiative for fiscal years 2024-2027. This addition signifies that there will be increased focus on holding polluters responsible for investigating and remediating PFAS contamination, as well as preventing future releases. As part of the designation, EPA would develop a policy regarding enforcement and settlement of PFAS matters under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund.

Speaking of CERCLA, EPA has proposed to designate two PFAS compounds –perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), –  as hazardous substances. 2023 is the year this rule will likely become final. This designation will have broad impacts across the regulated community. First, as CERCLA hazardous substances, the government and private parties alike will have a clear pathway towards cost recovery and other actions related to PFAS contamination. Most manufacturers know from experience that Superfund sites typically implicate a wide variety of parties, some of whom may have had a very minimal contribution to the contamination at issue. This wide net will be of particular concern for sites with PFOA and PFOS contamination, given their ubiquitous use, presence in the environment, and ability to detect at miniscule concentrations. The designation may also result in the reopening of investigations at Superfund sites where PFOA and PFOS could be an issue but has not yet been addressed.

We continue our annual tradition of covering legal trends and outlook for this year, focusing this week on employment and labor.  Following several years of pandemic-focused legislation, we are now seeing a significant uptick in new employment legislation and emerging work-related trends across the country.  The following are a few of the issues and trends that might impact manufacturers in 2023:

  1. Restrictions on Noncompete Agreements: The Federal Trade Commission (FTC) has become increasingly focused on noncompete agreements, having recently proposed a federal regulation that would broadly prohibit employers from requiring employees to execute such agreements.  The FTC has also taken legal action recently against companies, including two manufacturers, for their use of “harmful” noncompete agreements.  States are also continuing to pass laws curbing the right of employers to use such post-employment restrictions. In 2023, we expect this will be a hot topic and will prove to be a serious challenge to manufacturers seeking to protect their business interests.
  2. Right-Sizing or Rebalancing: Following recent economic and business forecasts and a tumultuous several years, manufacturers may be focusing on right-sizing, restructuring, or rebalancing their operations.  Among the critical levers in such discussions are labor allocation, workplace structure, and evaluation of skills and abilities; such discussions may result in layoffs, reductions-in-force, transfers, or redeployment of skills.  In 2023, there is likely to be an increased focus on right-sizing and rebalancing, which could necessitate a multi-disciplinary approach involving legal, human resources, and operations.
  3. Recreational Marijuana’s Impact on Workplace: In 2023, manufacturers will likely continue to face the challenge of managing their employees and workforces in safety-sensitive environments in states in which recreational marijuana is now legal (which includes nearly half of all states).  The legalization of recreational marijuana created significant tension for manufacturers across the country that seek to balance employee off-duty rights in light of this societal shift with the critical need to maintain safety in the workplace. 
  4. Transparency in Employment: Over the last year, there have been numerous state and local laws passed that impose pay transparency and disclosure requirements on employers.  Such laws impact manufacturers’ strategies around remaining competitive and leveraging pay and benefits, especially in a tight labor market.  These laws are part of a larger trend toward greater transparency in the workplace, which has gained traction in the last several years following a focus on closing the wage gap; the #MeToo movement; and the significant impact of social media on the workplace.  We expect that in 2023, laws will continue to be passed regarding transparency in pay, limiting the use of non-disclosure provisions following discrimination and harassment claims, and providing employees with greater rights to information, among other legislation consistent with this trend. 
  5. Diversity, Equity, Inclusion & Belonging (DEIB): In 2022, there were numerous new laws passed that expand civil rights protections for employees and which tackle more nuanced and specific issue areas. For example, many states enacted laws protecting hair styles and textures and providing more specific rights for employees who are breastfeeding.  Additionally, employers have been focusing on training leadership and employees on sensitivity in the workplace, etiquette, and DEIB, in an effort to foster a stronger and healthier workplace culture, improve communication, and limit legal risks.  We expect this trend to continue in 2023.
  6. Artificial Intelligence in the Workplace: Employers, including manufacturers, are turning toward artificial intelligence and algorithm-based technologies for recruiting, hiring, and other human resources-related functions.  Recently, such systems have received more scrutiny from agencies, including the Equal Employment Opportunity Commission, and lawmakers, who seek to ensure that such systems are free of bias.  In 2023, we predict these tools will continue to be a primary focus of enforcement agencies and legislatures.
  7. Union Organizing: Under the Biden Administration, there has been a significant focus on expanding employee rights to engage in union-organizing activity, among other protected activity.  There have also been highly-publicized, successful campaigns in the news, including in the manufacturing industry, in facilities across the country.  Manufacturers should continue their vigilance in 2023 as it relates to union organizing, including monitoring the issue, training supervisors on labor laws, and seeking counsel if necessary.

On January 5, 2023, Federal Trade Commission (FTC) Chair Lina Khan announced a proposed federal regulation that, if enacted, would invalidate non-competes and similar restrictive covenants that are routinely used by companies to limit a former employee’s professional activities post-employment.  The proposed rule would not only ban the future use of non-compete clauses for workers and independent contractors, the rule would invalidate these clauses retroactively.  Furthermore, the FTC signaled that it would also review non-solicitation clauses to see if they effectively function as non-competes.  Although the FTC’s sweeping proposal is unprecedented at the federal level, the agency is in fact catching up with several states that have already curtailed the bounds of non-compete clauses.

Traditional Principles of Restrictive Covenants

The FTC is targeting restrictive covenants that routinely appear in employment contracts, such as:

  1. Non-compete clauses,which prohibit an employee from working in the same business, industry and/or geographic area as their former employer;
  2. Customer non-solicitation clauses, which prohibit an employee from seeking business from the former employer’s customers, including prospective clients; and
  3. Employee non-solicitation clauses, whichprohibit an employee from trying to hire their former co-workers to work at a competing business.

Traditionally, restrictive covenants have been governed by state law, which is usually stipulated in the employment contract.  Although each state retains autonomy to set its own criteria, most courts have required that restrictive covenants be “reasonable.”  The threshold of reasonableness is not a bright-line rule; it depends on the facts and circumstances of each case.  Many courts, including Delaware, use a test that weighs: (i) the geographic scope and temporal duration of the clause; (ii) the employer’s legitimate economic interest in enforcing the provision; and (iii) a balancing of the equities.  New York courts also consider whether the clause “harms the public,” i.e., underlying policy issues.  If a restrictive covenant is deemed unenforceable, some courts will “blue pencil” or edit the clause to make it “reasonable” rather than completely striking it. 

The Current “State” of Play

Recently state legislatures and courts have reconsidered the legality of restrictive covenants.  Before 2007, only three states—California, North Dakota and Oklahoma—banned non-compete clauses.  Since then, over 20 states have adopted measures that curb an employer’s ability to enforce these provisions.  This watershed movement shows no signs of abating with approximately 66 bills pending in 25 states.  Among the jurisdictions with the most significant changes are Colorado and the District of Columbia, which have limited non-competes to “high-compensated employees,” and Illinois, which has banned non-competes for workers earning below a certain threshold.  However, most states still permit broad non-solicitation clauses to protect an employer’s confidential and proprietary information.          

What’s Next?

The FTC’s proposed rule is the latest initiative to implement President Biden’s Executive Order on Promoting Competition in the American Economy [view related post]. If adopted, the new rule would make it illegal for an employer to: (i) enter or attempt to enter a non-compete with a worker or independent contractor, whether paid or unpaid; (ii) maintain a non-compete with a worker; and (iii) represent to a worker that they are bound by a non-compete.  The FTC will look at the contract holistically to see if an employer has effectively implemented a non-compete through overly-restrictive non-solicitation clauses.  The requirements would apply retroactively. 

The proposed rule will be open to public comment for a 60-day window before it is published.  The FTC has specifically asked for statements on

  1. Whether franchisees should be covered by the rule;
  2. Whether senior executives should be exempted from the rule, or subject to a rebuttable presumption rather than a ban; and
  3. Whether low- and high-wage workers should be treated differently under the rule.

The new rule would take effect 60 days after final publication in the Federal Registry, and employers would be given 180-days to comply. 

If you have any questions about restrictive covenants and the proposed regulation, or wish to submit a comment to the FTC, please contact us. 

In late 2012, we created the Manufacturing Law Blog with the goal of providing our manufacturing clients with a holistic approach to the unique issues they face in their global operations.  Starting in 2016, we began a new tradition of dedicating our first three posts of the year to a yearly outlook from our different vantage points.

This year, I’m starting us off by addressing corporate compliance and litigation issues that manufacturers might expect to face in 2023:

  1. Acquisition Activity:  Inflation significantly impacted M&A both in the United States and globally in 2022.  Corporate buyers – many of which had plenty of cash on their balance sheets – invested in a significant way in 2022.  Many smaller manufacturers were acquired in proprietary deals without large-scale auctions.  Private equity and/or financial sponsors remained interested in buying smaller companies (including in the aerospace sector), but the macroeconomic conditions made such transactions costly.  One thing I will be looking at closely in 2023 is whether the “multiples” for acquisitions return to pre-COVID levels.  Sellers are looking for the right “fit” at this point, as opposed to simply selling to the highest bidder.
  2. Supply Chain Investments:  2022 was a year in which manufacturers invested heavily in diversifying their supply chains and also ensuring that their internal processes were more robust.  I expect this to continue in 2023 as more manufacturers look to us to help them develop internal playbooks and enter more long-term agreements with their suppliers.  Note: There is a way to do this in a business-friendly manner, but the days of handshake agreements are almost behind us. 
  3. More Litigation:  Litigation by and between manufacturers, customers, and suppliers will increase in 2023.  We saw an uptick of disputes and threats in 2022 – particularly with respect to obligations in long-term agreements that were not being satisfied.  Additionally, there were several disputes related to requested price increases as raw material and supply chain costs increased.  Business-to-business disputes do not get reported in the media in the same way as consumer litigation (such as class actions).  So, we often need to rely on what we hear in the marketplace and we expect 2023 to be a year filled with some significant disputes.  How do you protect yourself?  This is a good time to look at your significant contracts, especially those that are up for renewal. 
  4. Protectionist Policies Continue:  As I have mentioned in the past, the United States is not the only country to impose policies designed to ensure more domestic investment.  The parlance in the United States is “Buy American,” along with a litany of other phrases.  We are definitely seeing more interest from foreign manufacturers looking to not only expand their U.S. operations but to build factories as well.  As more factories are built, suppliers will want to  be ready to meet that need. 
  5. Government Enforcement:  Some of our most widely-read posts concern laws that the government often imposes against manufacturers.  These laws include the Foreign Corrupt Practices Act (FCPA), the False Claims Act, and trade compliance laws (ITAR/EAR), among others.  The demand by our clients for our assistance with developing policies and training to address some of these issues has increased significantly and we expect that to continue in 2023.  One area I would watch in 2023 is the U.S. government’s scrutiny of the use of various certifications, including Women Owned Small Business, Minority Owned Business, and others.  These certifications often give suppliers certain advantages with respect to government contracting.  With that said, I am seeing several reports of the U.S. government enforcing the rules surrounding these certifications, and thus it is important to make sure that manufacturers are in compliance with the rules. 

This week we are pleased to have a guest post by Robinson+Cole Labor and Employment Group lawyer Sapna Jain.

As an update to our October 12, 2022 post regarding the deadline for federal contractors and first-tier subcontractors to object to disclosure of their Type 2 Consolidated EEO-1 reports from 2016 to 2020, the Office of Federal Contract Compliance Programs (OFCCP) has provided federal contractors with more information regarding the release of such information.

Specifically, non-objecting contractors began receiving e-mails from the OFCCP as early as November 22, 2022, notifying them of the agency’s intent to release the EEO-1 data beginning on January 2, 2023. The e-mail stated that if the contractors believe the OFCCP sent this message to them in error – for example, if the company filed objections or did not meet the requirements for disclosure during a specific time period – contractors should reach out to the OFCCP as soon as possible, but no later than January 2, 2023.

The OFCCP also appeared to give another opportunity for contractors to object to the release of the EEO-1 data, provided the contractor can explain the delay, even if they did not submit an objection during the designated time period, which ended on October 19, 2022. If the OFCCP finds there was good cause for the lack of an objection filed during the earlier time period, it may consider the substance of the untimely objection. (Notwithstanding, we note that the OFCCP’s rollout timeline does not include any updates after the October 19, 2022 extension.)

In related news, the Center for Investigative Reporting, the group related to the investigative reporter who submitted the Freedom of Information Act (FOIA) request to the OFCCP, filed a lawsuit against the Department of Labor (DOL) in the United States District Court in the Northern District of California. The lawsuit alleges that the DOL violated the FOIA and is seeking an injunction to require the OFCCP to release the EEO-1 data, regardless of whether the contractor filed objections.

For questions regarding objections to the EEO-1 data disclosure or related issues, Robinson+Cole attorneys are able to assist.

‘Tis especially the season this year for company holiday parties.  Manufacturers may have avoided hosting large group gatherings over the last few years, including parties, and may be seeking ways to engage workers and increase morale in the workplace at this time of year; to that end, hosting holiday or festive lunches, parties, and gatherings may be on the “to do” list this fall for manufacturers.  In order to have a successful gathering, it is important that such employers carefully plan the gathering in a manner that ensures it is fun, inclusive, safe, and avoids common legal risks.  The following are some key questions manufacturers should be answering as they sit down to plan such gatherings.

Who should be invited?  Depending on the workforce and the goal of the gathering, it may make sense to consider whether to invite only employees, employees and their significant others, or employees and their families.  There are reasons to limit and expand the list of invitees but the key consideration is – what impact will limiting or expanding the list have on the dynamics of the gathering and will it be positive or negative?

Should alcohol be served?  If so, are there ways to mitigate any associated health and safety risks?  This is a key question and will depend on the workforce, the venue for the gathering (e.g., manufacturing floor versus restaurant), and other factors.  Generally, serving alcohol can create risks to health and safety and depending on applicable state laws, could create liability to the employer if there is resulting harm to people or property.  For that reason, employers who are serving alcohol at such gatherings should consider implementing procedures to limit excessive or inappropriate consumption of alcohol including: serving non-alcoholic beverages in addition to alcoholic (e.g., festive mocktails), limiting alcohol per person such as using a ticket system (e.g., 1 or 2 tickets maximum), limiting the type of alcohol served, engaging bartenders to serve alcohol (and ensuring they will be contractually liable for issues that arise as a result of such service), ensuring that alcohol or the bar area is not the focus of the gathering, serving lunch or dinner, ensuring managers and supervisors are generally monitoring employees (e.g., observing if anyone is visibly intoxicated), among other actions.  Employers may wish to determine, with their insurance carrier, if they could be liable for alcohol or other issues related to such gatherings.

What is the goal of the gathering and how can that be accomplished?  It is important to remember that the party should support the goal.  For example, if the goal is to create comradery and positive team dynamics, it may make sense to include activities in the agenda (e.g., trivia, games, etc.) rather than general networking.  If the goal is for employees to meet each other who may not have met, it may be helpful to provide name tags, assign the seating, and schedule activities that foster interactions.

How will we remind employees of the company’s expectations for conduct when attending such gatherings?  Typically, gatherings are held in a more informal and relaxed environment; even so, employees will need to comply with company policies and expectations which may necessitate a reminder ahead of the gathering.  To that end, employers should consider sending out a reminder email the day before which references key policies that remain in effect such as sexual harassment, professionalism and respect in the workplace, dress code, and others.

Who will supervise the gathering?  This question is critical, as employers have a duty to exercise ordinary and reasonable care in supervising such gatherings.  Therefore, employers should ensure managers understand their role in supervising and circulating during the gathering.

Should attendance be mandatory or voluntary?  This depends on the gathering.  Assuming that this is a holiday or festive gathering that occurs after hours, it may make sense to make attendance voluntary.  First, not all employees may celebrate the holidays and may not feel comfortable attending.  Second, mandatory attendance may increase the likelihood that the employer is liable for any issues that arise such as workplace injuries (i.e., workers’ compensation).

How do you know if it was a good party?  Hopefully, employers receive positive feedback about the gathering!  That being said, it is important to ask employees and managers about the gathering and solicit feedback for an important reason – if anything occurred that may be problematic, employers will want to know as soon as possible so the issues can be promptly addressed.

Manufacturers who are planning holiday or festive gatherings should consult competent counsel with any questions regarding applicable laws and best practices.  A thoughtful and well-planned gathering can certainly make the holidays bright!