Legal Pot = Manufacturing Storm Clouds (the Refrain)

A few months back, I posted some thoughts about recent efforts to legalize medical and recreational marijuana, with an emphasis on the potential issues such laws would have on manufacturers – particularly manufacturers in a space requiring a heightened concern for employee safety.  See Legal Pot = Manufacturing Storm Clouds” (May 29, 2019).  To my surprise, I started fielding related questions as soon as I published the blog.

So here is the question:  What do you do when an employee has a prescription to use medical marijuana under your state’s law and arrives to work reeking of marijuana?  Suppose the employee is employed in a job where a mistake could be dangerous to him or herself, or to the public at large.  (Think airline pilot, health care professional, high steel construction worker, or a laborer in a large equipment manufacturing facility.)

If we assume the employee’s medical condition would be covered under the Americans with Disabilities Act or a comparable state law, the employee’s employer may be required to accommodate that person’s off-duty use of marijuana.  See  Wild v. Carriage Funeral Holdings, Inc. and Noffsinger v. SS Niantic Operating Co., 2018 WL 4224075 (D. CT 2018).  But what if the person’s medical condition required him or her to use marijuana during a break?  Or what happens if the prescription says simply, “as needed?”

Generally speaking, an unsubstantiated fear that “something bad” may happen does not justify refusing to accommodate the individual.  So an employer’s concern or belief that the employee really does not “need” to use marijuana during break times or that she or he is “under the influence at work” may not be sufficient absence proof of intoxication.

Arguably, the above court decisions would permit an employer to discipline an employee for using marijuana at work or being under the influence of marijuana while at work.  The challenge of course is proving it.  I am told that like a fine cigar, the aroma of marijuana can linger on a person’s clothing long after use.  I also understand from my review of the literature that there has yet to be developed a reliable test for determining whether someone is under the influence (unlike alcohol, where reliable field sobriety and blood tests are highly accurate).

I admit I have no perfect answers.

This remains one area where society has outpaced both the law and the science.  Until we can agree on where we draw the line between public safety and individual liberty, I think these issues will continue to confound HR and legal professionals.

Manufacturers are Not Immune to Claims that their Inventions are Patent-Ineligible

This week, we are pleased to have a guest post from John Cordani.  John is a member of Robinson+Cole’s Manufacturing Industry Team and regularly counsels clients on intellectual property issues involving patent procurement, licensing, and litigation.

It is no secret that the competitive edge of U.S.-based manufacturers is often predicated, at least in large part, on technological innovation and the patents that protect them. The broader the patents, the better. Usually the only significant obstacle faced by manufacturers trying to obtain broad patent rights was ensuring that their patents were still narrow enough to be new and non-obvious in light of the known technologies in the industry. Most manufactures are not used to considering whether their innovations are not eligible for patent protection in the first place. After all, in order to be patent eligible, an invention need only be drawn to a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Since the statute explicitly calls out “manufactures” as eligible for patenting, manufacturers might be forgiven for believing that their patents would easily satisfy this standard. Not so, says the Federal Circuit. Continue Reading

Executive Orders Seek to Limit the Bite of Agency Guidance

On October 9, 2019, President Trump issued two executive orders regarding agency guidance – one focused on the development of new guidance and the other on the appropriate use of guidance in enforcement actions. And EPA is not wasting any time taking action. EPA Administrator Andrew Wheeler issued a memorandum on October 21, 2019 announcing the creation of two working groups to interpret and apply the executive orders. While he did not establish a time frame for completion of the working groups’ review processes, Administrator Wheeler indicated that the working groups would provide the agency with further instructions in the “coming weeks.”

One of the executive orders seeks to ensure that agencies cannot use guidance documents to enforce standards that are not otherwise contained in a statute or regulation. “When an agency uses a guidance document to state the legal applicability of a statute or regulation that document can do no more, with respect to prohibition of conduct, than articulate the agency’s understanding of how a statute or regulation applies to particular circumstances.” If an agency relies on a document or decision to assert a new or expanded claim of jurisdiction, the document or decision must be published in the Federal Register before the conduct over which jurisdiction is sought occurs. The order also requires that regulated parties have an opportunity to contest an agency’s legal and factual determinations before the agency issues that party a no action letter, notice of noncompliance, or other similar document.

The other executive order sets forth more stringent procedures for the development and publication of agency guidance. Within a specified timeframe, all agency guidance must be available on the agency’s website in a single, searchable database. Under the order, agencies are also required review their guidance documents and rescind any that should no longer be in effect. The order also requires agencies to develop (or amend) regulations establishing procedures for issuing guidance documents. At a minimum, these regulations must contain the following provisions:

  • A requirement that guidance documents clearly state that they do not bind the public, except as authorized by law or as incorporated into a contract;
  • Procedures for the public to petition for withdrawal or modification of a particular guidance document; and
  • A more stringent review process, including a public notice and comment period, for “significant” guidance documents.

Each agency will be responsible for addressing these executive orders, but it is clear that EPA has already begun that process. We will stay tuned to see how EPA will incorporate these executive orders into its daily compliance and enforcement activities.

Protecting a Manufacturer’s Competitive Advantage: Recent Developments in Post-Employment Restrictions

I have posted a few times here about using post-employment restrictions to preserve a manufacturer’s competitive advantage.  See  “Non-Compete Cautionary Tale” (Nov, 2, 2018); “I’m New – And It’s No [Trade] Secret” (Oct. 27, 2014) and “Even More Reason for Manufacturers to Update Their Employment Agreements” (June 15, 2015).  Many of my clients use these tools (and others) to protect that “secret sauce” that gives them a market advantage.

And so, I watch with more than a little interest as state legislatures move to adopt new restrictions on these tools.  California long held the title for the most restrictive of states, with its statutory prohibition on virtually all post-employment restrictions.  Maine, New Hampshire, Maryland and Rhode Island have each joined that club by enacting laws prohibiting non-competes for low wage workers (although each defines “low wage” differently).  Massachusetts’ adopted a law banning non-competes for non-exempt employees, limits them to one-year, and imposes a “garden leave” requirement.  Oregon now requires notice of the non-compete within 30 days of the employee’s termination, while proposed legislation in New Jersey imposes a 30-day pre-hire notice.  Washington State recently adopted a comprehensive scheme banning non-competes for employees earning less than $100,000 per year (contractors earning less than $250,000 per year).  And, to add a bit of intrigue, the Washington law will not take effect until January 2020, but will apply retroactively.

This changing landscape requires manufacturers and others to think creatively about their employment and other agreements to enhance protections.  Many such agreements have sought to “contract around” state law by using different so-called “forum selection” and/or “choice of law” provisions, with mixed success.  See generally Brown & Brown, Inc. v. Johnson and Lawley Benefits Group, LLC, 25 N.Y.3d 364 (2015)(rejecting Florida “choice of law” provision); NuVasive, Inc. v. Patrick Miles, 2019 WL 4010814 (Del. Ch. Aug. 26, 2019)(rejecting Delaware choice of law); Gen. Electric Co. v. Uptake Technologies, Inc., 2019 WL 2601351 (N.D. Ill. June 25, 2019) (applying New York law).  Others have sought to circumvent state restrictions by tying the restriction to a number of federal laws which pre-empt contrary state laws under the Supremacy Clause to the United States Constitution.  See e.g. Latif v. Morgan Stanley & Co., 2019 WL 2610985 (SDNY June 26, 2019)(Federal Arbitration Act); Abdullayeva v. Attending Home Care Services, LLC, 18-651 (2d Cir. 2019)(National Labor Relations Act); Clark v. Lauren Young Tire Center Profit Sharing Trust, 816 F.2d 480, 481 (9th Cir. 1987)(ERISA).

Given this evolving landscape, manufacturers seeking to maintain their advantage should periodically review and update agreements and policies.

Common Mistakes That Lead To Big Customer Disputes

By nature, lawyers tend to be reactive and we are trained to respond to crisis and/or problems.  So, it takes a lot of work to develop proactive skills so that we can help our clients avoid problems such as large customer disputes or worse (the dreaded class action).

Over time, we have noticed common themes that are precursors to these kinds of disputes.  We have been sharing them with clients as we train sales staff globally.

Here are some of the themes that can cause enhanced risk and/or liability for a manufacturer:

  • Ignoring communications from outside parties
  • Responding slowly to internal tasks and questions
  • Sending unnecessary, inaccurate or unprofessional internal emails
  • Conducting your own independent analysis/investigation
  • Poor record-keeping (not preserving records)
  • Without specific authorization from management –
    • Commenting on legal/contract issues
    • Revealing internal operations or product details
    • Sharing internal communications
    • Admitting fault or mistake
    • Making a settlement offer
    • Agreeing on a settlement/resolution
    • Signing documents related to a claim/dispute

OSHA Approves New Respiratory Fit Testing Protocols

Thank you to my colleague, Jonathan Schaefer, for this post. Jon focuses his practice on environmental compliance counseling, occupational health and safety, permitting, site remediation, and litigation related to federal and state regulatory programs.

Today OSHA issued a final rule approving two additional quantitative fit testing protocols for inclusion in appendix A of the Respiratory Protection Standard. These protocols are:

  1. The modified ambient aerosol condensation nuclei counter (CNC) quantitative fit testing protocol for full-facepiece and half-mask elastomeric respirators; and
  2. The modified ambient aerosol CNC quantitative fit testing protocol for filtering facepiece respirators.

Both protocols are variations of the original OSHA-approved ambient aerosol CNC protocol, but have fewer test exercises, shorter exercise duration, and a more streamlined sampling sequence. The new rule becomes effective September 26, 2019. Continue Reading

For Manufacturers, “It’s Déjà Vu All Over Again!”

[With apologies to the great Yogi Berra!]

Over the last three years, I have spent a good bit of space on this blog keeping manufacturers informed of the Department of Labor’s efforts to raise the wages of lower and middle level managerial employees and supervisors by raising the “salary threshold”.  See Blog posts of March 14, 2019, November 5, 2017, August 31, 2017, September 19, 2016, and May 31, 2016.  By raising the salary threshold, manufacturers must either pay employees time-and-a-half for overtime or raise the wages of those workers to meet the minimum salary (assuming those workers also perform the required duties).

This week, the media widely reported that the White House’s Office of Management and Budget approved the DOL’s proposal to raise the salary threshold from $23,660.00 annually ($455.00 per week) to $35,308.00 annually ($679.00 per week), a 49.2% wage increase.  That rule change is expected to take effect in January 2020.  The proposed rule also raises the so-called “highly compensated employee” threshold from $100,000.00 per year to $147,414.00 per year.

If this headline sounds familiar, we have been here before.  In 2016, the DOL issued a rule to raise the salary threshold to $47,676.00.  Manufacturers and other employers raced to implement changes to their pay and overtime plans to take this significant increase into account.  Professionals representing manufacturers had our hands-full helping to design wage plans balancing competing demands.  Some manufacturers increased the annual salaries of employees on the margins.  Some reclassified workers as non-exempt, began requiring them to “clock-in and -out,” and otherwise took steps to comply with the new law.

In the Summer of 2016, however, a federal judge in Texas granted an injunction preventing the implementation of the rule, and the election of President Trump in November 2016 halted efforts to enforce the new standard.  (In 2017, the same Texas federal judge issued a permanent injunction preventing implementation of the rule.  The DOL appealed that decision to the Court of Appeals, which then stayed the processing of the case in light of the DOL’s statement that it would revisit the rule.)

The sudden “on-again, off-again” wage increase caused a great deal of confusion for manufacturers.  Having already announced changes to their wage plans, some had no choice but to implement them.  Some manufacturers revoked their plans – resulting in some negative HR fallout.  Some states rushed in to raise the minimum wage and minimum salary standards under state law to compensate after the brakes were put on the federal standard.

With respect to the new rule, all I can caution is that we have seen this movie already.  Manufacturers should be prepared to implement the new rule should it go into effect in January.  (My bet is that this administration will work hard to implement the rule before the 2020 election.)  But at the same time, one federal judge already enjoined the enforcement of the prior rule.  It remains to be seen whether that injunction remains in effect or whether the new rule will overcome the legal challenges which were successful in 2017.

Stay tuned!

Is the USMCA (Replacement for NAFTA) Going to be Ratified?

Last night, I had the chance to attend an interesting panel discussion featuring Richard Steffens (Acting Deputy Assistant Secretary for Western Hemisphere, U.S. Department of Commerce) and Jacobeth Hernandez (Consul for Economic Affairs at the Consulate General of Mexico in New York).  The topic was the USMCA, which is the United States-Mexico-Canada Agreement that is designed to replace NAFTA.  Ok, enough with the acronyms.

If you are wondering where things stand with the USMCA and ratification, you can read about it here.  In short, in the United States, Congress is attempting to reach a deal particularly on the provisions that have to do with labor and the environment.  There are some helpful “fact sheets” available on the website of the United States Office of the Trade Representative for how the USMCA will impact manufacturers.

Based on last night’s panel discussion, here are my takeaways from the current draft of the USMCA:

  • One of the main issues that Mr. Steffens discussed is “fixing the borders” for trade.  This has nothing to do with immigration.  Rather, it has to do with simplifying the paperwork that needs be completed in order to export to Canada and Mexico given the various regulatory differences.  All the countries appear to be committed to trying to take on this very real, albeit practical, issue.
  • The USMCA includes several provisions that are intended to protect intellectual property.  Mr. Steffens noted that this was a central issue for small and medium sized businesses.
  • As noted above, labor and environmental compliance issues remain paramount in the USMCA.  With that said, Mr. Steffens noted that the three countries agreed on a significant number of items in the agreement.

We will continue to follow the progress of the USMCA.

EPA Formalizes Policy to Partner with States on Environmental Compliance and Enforcement

Over the summer, EPA published a policy document to enhance cooperation between it and the many state agencies that enforce federal environmental programs. The document formalizes a long-standing priority of this administration to, as we previously reported, “rebalance the power between Washington and the states to create tangible environmental results for the American people.”

The policy outlines procedures for effective communication and planning, as well as details regarding the balance of power between EPA and the state agencies. EPA and state agencies will work together to develop inspection and enforcement priorities. Generally speaking, EPA will defer to states to implement inspections and enforcement for authorized programs, but EPA may get involved in certain situations, such as:

  • Violations that are part of the National Compliance Initiatives, specific program priorities established by EPA, to ensure nationwide consistency in the response,
  • Situations involving multi-state or multi-jurisdictional interests or interstate impacts,
  • Emergency situations where there is substantial risk to human health or the environment,
  • Situations where the state may lack the equipment, resources, or expertise to deal with the issue, and
  • Serious situations that may warrant criminal enforcement.

EPA also established procedures for elevating issues when there is disagreement between EPA and the states. In the event of a disagreement, an issue should be elevated to senior management on both sides within 30 days. If, after elevation, there remains a dispute, the matter should be elevated within 60 days to EPA Assistant Administrator for the Office of Enforcement and Compliance Assurance for a final decision.

The policy encourages information sharing between the agencies. However, it specifically notes that EPA may be precluded from sharing certain information to preserve confidentiality. For example, EPA may be required to withhold details of a planned enforcement action from a state if the state has not executed a confidentiality agreement or the state’s freedom of information laws provide for more disclosure.

The policy is one more step towards EPA’s goal of empowering states and enhancing cooperation with regard to federal environmental programs.

Manufacturing a Summer (Employment) Potpourri

This blog post is dedicated to those of you who took a heathy summer break and want to catch up on the summer’s major developments.  Let the speed reading begin!

As predicted here, the Trump Administration launched a series of not-so-surprising raids to arrest undocumented workers.  As of this writing, there has not been a noticeable increase in the prosecution of employers who employ undocumented workers.  We can expect more ICE raids in the future.

The National Labor Relations Board issued the first three (of what some anticipate will be many) proposed rules to role back the Obama-era agenda.  The first proposal would abolish the process by which a union could block a decertification petition from moving forward simply by filing a charge of discrimination, no matter the merits of the charge.  In its place, the Board would adopt a so-called “vote and impound” procedure, under which employees would be allowed to vote but their ballots would not be counted until the charge was ultimately decided.  The second change would require employers which voluntarily recognize a labor union to give written notice to employees and permit them 45 days to challenge that recognition.  Finally, for employers in the construction industry, the proposed rule would require a union to show that recognition of the union was based on true majority support in order to prevent a construction employer from withdrawing recognition after the labor contract expires.

In New York, Governor Cuomo signed comprehensive legislation expanding New York’s already robust anti-discrimination law.  Among other things, these changes include:

Effective immediately:  Prevailing plaintiffs “shall” be awarded attorneys’ fees (prevailing defendants are eligible only if the claim was found to be “frivolous”), and employers must provide notice of their sexual harassment policy and annual training program, both the time of hire and annually thereafter.  (Notice must be in English and the language identified as each employee’s primary language.)

Effective October 11, 2019:  Employees claiming sexual harassment must only establish that the harassment was more than “petty or slight” to establish a cause of action.  Similarly, the affirmative defense established by the United States Supreme Court in the Farragher and Ellerth decisions will not be available in New York State sexual harassment cases.  Similarly, employees claiming discrimination will no longer be required to show that they were treated less favorably that a similarly situated comparator.  The Human Rights Law also is amended to apply to contractors to protect them against all forms of discrimination or harassment.  And all victims of discrimination will be able to win punitive damages in court litigation.

Also effective October 11, 2019, settlement agreements or other contract provisions requiring the arbitration of any discrimination or retaliation claim will be banned.  On the same date, the complex ban on non-disclosure provisions in agreements resolving sexual harassment claims (giving the settling individual a non-waivable 21-days to consider the provision and 7-days to revoke acceptance) will apply to all settlements of discrimination, harassment and retaliation claims.

Effective November 10, 2019, the New York Human Rights Law will apply to all employers in New York State, regardless of size.

Effective January 1, 2020, any non-disclosure agreement must include carve-outs permitting individuals to communicate with law enforcement, state and federal anti-discrimination agencies or a private attorney hired by the employee.

Effective August 12, 2020, an alleged victim of discrimination will have three (3) years to file an agency charge claiming discrimination.

These are just some of the major things which happened while you were at the beach.  Suffice it to say, before charging ahead considering these developments, manufacturers should confer with qualified employment counsel.