NLRB General Counsel Rolls Back Aggressive Anti-Manufacturer Handbook Rules

National Labor Relations Board General Counsel Peter Robb issued a June 6 memorandum outlining his views on the legality or illegality of handbook rules in light of recent Trump NLRB decisions.  That guidance, which can be found here, gives an overview of Robb’s interpretation of the law.

Robb’s guidance represents a radical shift away from the Obama NLRB’s aggressive challenge to common workplace rules.  While one might say that memorandum represents “one lawyer’s opinion,” in truth the memorandum gives a roadmap for employers for drafting work rules and policies.  As head of the prosecuting arm of the NLRB, Robb decides which rules to challenge and which to leave uncontested.  The “Gate-Keeper” function will set the NLRB’s tone for the remainder of his term – Robb can serve until his term expires in 2021 and is subject to reappointment should President Trump or another Republican win the 2020 general election.

Robb’s predecessor, Obama-Appointed General Counsel Robert Griffin, had issued his own interpretive guidance in 2015.   The different approaches taken by the two very different agency prosecutors are striking.

For example, while Griffin’s 2015 memorandum declared unlawful rules requiring employees to be “respectful to the company, other employees, customers, partners and competitors,” Robb’s 2018 memorandum makes clear that employees can be punished for violating rules prohibiting ”rude,” “discourteous,” or “unbusinesslike” behavior.   Similarly, Griffin’s approach found unlawful rules prohibiting employees from making “fraudulent,” defamatory,” or “otherwise inappropriate” statements to co-workers, while Robb’s approach holds such requirements to be lawful and appropriate.

Robb properly cautions, however, that so-called neutral rules adopted or used to suppress the exercise of protected rights by employees would still be held to be unlawful.

For at least the next few years manufacturers will have the opportunity to adopt clear rules and policies to govern worker conduct.  Manufacturers may wish to review with their in house or outside counsel the implications of this important development.

EPA to Rethink Cost-Benefit Analyses During Rulemaking Process

This week, EPA announced that it is considering developing regulations to optimize the use of cost-benefit analyses when it is taking regulatory action. Many environmental statutes require the consideration of costs and benefits to evaluate the impacts of policy choices. EPA is seeking public comment on whether and how these analyses can be made more consistent, reliable, and transparent.

In announcing the Advance Notice of Public Rulemaking, EPA Administrator Scott Pruitt said:

Many have complained that the previous administration inflated the benefits and underestimated the costs of its regulations through questionable cost-benefit analysis. This action is the next step toward providing clarity and real-world accuracy with respect to the impact of the Agency’s decisions on the economy and the regulated community.

EPA is specifically seeking comment on a number of topics, a few of which are listed below:

  • Should certain cost-benefit terms be defined across statutes?
  • How should EPA address benefits from reductions in pollutants that are not directly regulated?
  • How should EPA address costs or benefits that are known, but that cannot be scientifically quantified or monetized?
  • Should EPA consider the cumulative regulatory costs and benefits of multiple regulations?
  • Would a requirement for systematic retrospective review of regulations help identify necessary revisions and guide future rulemaking efforts?
  • What are the potential concerns with issuing regulations governing EPA’s use of cost-benefit analyses when certain statutes may not specifically reference the need to consider costs along with benefits?
  • How can EPA document its cost-benefit analyses to make them more transparent?

Once the Advance Notice of Public Rulemaking is published, the public will have 30 days to offer comments to EPA.

Manufacturing Law Best Practices for Contracting With Machine Shops

Almost all industrial manufacturers deal with machine shops in some form or another.  A typical scenario is that a manufacturer will provide their print (or that of their customer) to a machine shop to fabricate a component or sub-component.  In the manufacturing law world, business to business disputes with machine shops outnumber those up the supply chain.

For that reason, I was particularly interested in a recent blog post by Peter Zelinski, who is Editor-in-Chief of Modern Machine ShopThe blog post, “10 Reasons Why Machine Shops Vary So Much in Quoted Pricing,” is an interesting read as it identifies factors as to why there is a variation in quotes from machine shops for identical machining work.  Two of the factors identified that I thought were interesting were entitled “interpretation” and “qualification.”  First, that one machine shop might quote a higher price because of their interpretation of the job (which another shop might interpret differently).  Second, one machine shop might quote a higher price in an effort to recoup costs associated with qualifying for a certain industry.

From a manufacturing law perspective, here are a few best practices for dealing with machine shops.

First, like everything else, you often get what you paid for.  A “low bidder” mentality – particularly if you are in a highly regulated space like aerospace – can lead to problems down the line particularly when the machined parts are out of specification.  Do your terms and conditions have audit / inspection rights?  How long do you have to complain about parts being out of specification and what is your relief?

Second, it is important to protect your intellectual property (read:  processes, know-how, etc.).  Manufacturers should ensure that their terms and conditions are clear on who owns the intellectual property being provided to a machine shop.  While that might seem simple when it comes to a print, it becomes less clear when you are talking about processes – particularly when the machine shop wishes to adopt those processes for other customers.

Finally, read the fine print if the machine shop has its own terms and conditions.  What happens if your customer cancels the order?  Can you then cancel the order placed with the machine shop?  Do you have to pay a termination fee?  This is where a manufacturer is faced with the dreaded “battle of the forms” (we have written several blog posts on this) where your T&Cs are in conflict with that of your supplier.

 

 

Expanding Limits on Applicant Salary History Questions

Manufacturers in Alaska, Arizona, California, Connecticut, Hawaii and Vermont face new limits on the use of an employee’s salary history.

The state legislatures in Connecticut and Vermont have both adopted laws banning manufacturers from asking about an applicant’s prior salary.  Those laws are expected to be signed by the Governors of those states and will take effect on January 1, 2019.  The provisions allow manufacturers to ask applicants about their salary or wage expectations, so long as the manufacturer does not ask about an applicant’s prior salary or pressure an applicant to disclose salary history.  Both laws allow salary history inquiries when required by other federal or state laws.  A similar law has been introduced in the New York legislature by Governor Andrew Cuomo.  Its prospects are not certain as of this writing.  New York City banned inquiries about and the use of salary history effective October 2017.  See prior blog post “New York City’s Salary History Ban Takes Effect October 31.”

Meanwhile, in Rizo v. Yovino (April 9, 2018), the Ninth Circuit Court of Appeals held that an employee’s salary history could not be used to defend a claim under the Equal Pay Act.  The court rejected the contrary views of both the EEOC and several sister Courts of Appeal to the effect that prior salary along with other factors could be used in making compensation decisions.  The Ninth Circuit covers manufacturers in Alaska, Arizona, California and Hawaii.

In light of these developments, part of a growing trend across the United States, manufacturers may wish to review their employment applications and interview guidelines to limit inquiries into salary history in these jurisdictions and continue to watch this space for updates.

California Transparency in Supply Chains Act: What Manufacturers Need To Know

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

In 2010, California enacted the California Transparency in Supply Chains Act (the “Act”).  The goal of the Act is to curtail human trafficking and slavery by requiring certain manufacturers and retailers doing business in California to disclose publicly the extent of their efforts to prevent such abuses in their supply chains.

While the law does not require companies to take any affirmative steps to curtail human trafficking, it does require covered companies to disclose on their websites whether and to what extent they undertake certain efforts to investigate and reduce the risk of human trafficking.  Manufacturers or retailers currently doing business in California or planning to expand to California need to assess whether they are covered by the law and, if so, take steps to ensure that they comply with the disclosure requirements.

WHO IS COVERED BY THE ACT?

In order to be covered by the Act, a company must:

  1. Have annual worldwide gross receipts exceeding $100 million;
  2. Be identified as a retailer or manufacturer on the company’s California tax returns; and
  3. Be doing business in California.

For retailers and manufacturers who meet the $100 million threshold, even relatively minimal contacts with California can classify the company as doing business in California.  A company is considered to do business in California if it is organized under California law, domiciled in California, or if it meets certain minimum thresholds for California sales (the lesser of $500,000 or 25% of company’s total sales), California property holdings (the lesser of $50,000 or 25% of company’s total property holdings), or compensation paid in California (the lesser of $50,000 or 25% of company’s total compensation paid).  In 2015, the California Office of the Attorney General estimated that the Act covered approximately 1,700 companies at that time.

WHAT IS REQUIRED FOR MANUFACTURERS THAT ARE COVERED?

A company that is subject to the Act must post on its website disclosures regarding the following topics:

  • To what extent the company engages in verification of supply chains to evaluate and address risks of human trafficking and slavery.  (If the verification is not performed by a third party, the disclosure must specify as such).
  • To what extent the company audits suppliers to verify supplier compliance with company standards for trafficking and slavery in supply chains.  (If such audits are not unannounced or independent, the disclosure must specify as such).
  • To what extent the company requires direct suppliers to certify that materials incorporated into the product comply with the slavery and trafficking laws of the countries where they do business.
  • To what extent the company maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
  • To what extent the company provides employees and management who have direct responsibility for supply chain management with training on trafficking and slavery (particularly on mitigating risk within the supply chains of products).

The Act does not require that companies undertake any efforts to combat human trafficking or slavery.

It only requires that covered companies disclose the extent of their efforts on each of the required topics.  The company must disclose the extent of its efforts on each topic; providing only a yes/no response as to whether the company undertakes efforts with respect to each topic does not meet the Act’s requirements.  The required disclosures must be posted in a conspicuous link on the company’s internet homepage.  (Companies that do not have a website instead must provide written disclosures within 30 days of the receipt of a request to any consumer who requests them).  Many companies comply with this requirement by maintaining a link on the top or bottom of their home pages.  A resource guide published by California Office of the Attorney General contains examples of what the agency views as adequate disclosures under the Act.

WHAT HAPPENS IF YOU DO NOT COMPLY?

Enforcement of the Act rests exclusively with the California Attorney General.  The sole remedy in an enforcement action by the Attorney General is injunctive relief.

However, some consumers and their attorneys have begun to bring cases under California consumer protection statutes that permit private actions (such as the Unfair Competition Law, the False Advertising Law, and the Consumer Legal Remedies Act) on the theory that a violation of the Act constitutes  a violation of one of the other laws.  So far, courts have not reached the issue of whether violations of the Act are actionable under these other statutes.

Companies subject to the Act must be aware of the Act’s requirements and place a priority on compliance.

First, covered companies not in compliance with the Act likely face a high probability of an inquiry or enforcement action from regulators.  Because the disclosures are required to be publicly posted, any deficiencies are likely to come to the attention of regulators (particularly given the relatively small number of companies subject to the Act).

Second, the risk of private consumer protection lawsuits based on alleged violations of the Act is uncertain at this time because courts have not yet determined whether such suits are permitted.  If any court decisions endorsing such legal theories come forward, the risk of noncompliance will increase significantly as non-compliant companies may find themselves liable for monetary damages and attorneys’ fees in addition to injunctive relief.

New York Adopts New Tools to Fight Gender-Based Harassment

The New York State Legislature and New York City Council adopted broad new requirements to combat workplace gender-based harassment. New York State’s new obligations were signed into law on April 12 and take effect at different times over the next 180 days. New York City’s new requirements take effect on April 1, 2019.

New York State

Passed as part of the 2019 budget, New York State adopted the following new requirements:

Mandatory Arbitration – Banned provisions requiring arbitration of sexual harassment claims or limiting an employee’s ability to bring a sexual harassment claim in any forum.

Protections for Non-Employees – Expanded a manufacturer’s obligations by making manufacturers liable for the harassment of a contractor, subcontractor, consultant, or other person providing services pursuant to a contract if that manufacturer knew or should have known of the conduct and failed to take action.

Non-Disclosure Agreements ­­– Banned any provision in an agreement preventing the disclosure of the underlying facts and circumstances of a sexual harassment claim unless the provision is the plaintiff’s preference. The law requires that to be effective the non-disclosure provisions must be included in the agreement presented to “all parties,” with the plaintiff having 21 days to consider the agreement and 7 days to revoke acceptance of the agreement.

Sexual Harassment Training and Policy – Directed the New York Department of Labor and the New York State Division of Human Rights to develop a model sexual harassment policy and employee training program. Effective October 8, 2018, every manufacturer must adopt the model sexual harassment policy (or a policy which exceeds the model policy) and annually train all employees using the model training program (or a training program which exceeds that model program).

New York City

Under the legislation adopted  by the New York City Council, all manufacturers that employ 15 or more employees must provide anti-harassment training to all employees and interns within 90 days of work and annually thereafter. The City Commission must develop an online training program meeting the requirements of the law.  The training program will be available for use by manufacturers without charge.

Manufacturers may wish to confer with their human resources and legal professionals to update policies and training programs so as to comply with these laws and to be prepared for issues as they arise after employee training.

Manufacturing Sector Getting Hit with Cyber-Attacks: Portable Oxygen Device Manufacturer Notifies 30,000 Patients of Breach

Inogen, which manufactures portable oxygen devices, has alerted the Securities and Exchange Commission in a recent filing that it is notifying 30,000 individuals that their personal information was compromised when a hacker gained access to one of its employees’ email accounts through a phishing scheme. Continue Reading

Failed to File An Electronic Injury Report? OSHA May Be Looking For You

Thank you to Jonathan Schaefer for this post. Jon is an attorney in our Environmental, Energy & Telecommunications Practice Group and his practice focuses on environmental compliance counseling, occupational health and safety, permitting, site remediation, and litigation related to federal and state regulatory programs.

Under the 2016 Recording and Reporting Occupational Injuries and Illnesses rule (RROII Rule), December 30, 2017 was the first deadline for certain employers to electronically submit their 2016 300A summary forms, which summarize job-related injuries and illnesses logged during the year, with OSHA.  Currently, the RROII Rule requires two types of establishments to continue submitting 300A summary forms electronically: (i) establishments with 250 or more employees; and (ii) establishments with between 20 and 249 employees in high­hazard industries.

Leading up to the December 30th submission deadline, tens of thousands of new accounts were reportedly created on OSHA’s Injury Tracking Application, and more than 200,000 300A forms were submitted to OSHA before the deadline.  However, OSHA had expected approximately 350,000 establishments to file submissions in compliance with the RROII Rule.

As a result, in February, OSHA instructed its compliance officers to initiate inquiries into whether qualifying establishments had electronically filed their 2016 300A summary forms.  A finding that an establishment failed to timely submit such form may result in the issuance of an other-than-serious citation, which currently carries with it a maximum penalty of $12,934.

In addition to these inquiries, OSHA will also conduct a mass mailing outreach to establishments that did not submit their 2016 300A summary forms to further inform them of the requirements of the RROII Rule.

Under the Trump Administration, OSHA was expected to relax or eliminate the RROII Rule.  Initially, a proposed rulemaking to do just that was to be opened in December 2017.  However, that deadline came and went with no formal action.  To date, OSHA has not taken any other formal action to eliminate the RROII Rule.

Regardless of the fate of the RROII Rule, covered employers are still required to annually post a copy of the 300A form.  Employers must post this summary each year between February 1 and April 30.  This summary must be posted in a common area where notices to employees are usually posted.

EPA Considering Ban On The Use Of Private Scientific Data

EPA Administrator Scott Pruitt is considering a plan to restrict the agency’s use of scientific data to only that data which is publicly available. The move would prevent EPA from using private studies, dubbed “secret science,” to justify actions such as passing new regulations. It is not yet clear whether Pruitt will attempt to use this potential plan to attack regulations already on the books, but if he does, we could see the rollback of regulations and standards that are based on confidential human health data.

In support of his plan, Pruitt stated:

We need to make sure their data and methodology are published as part of the record. Otherwise, it’s not transparent. It’s not objectively measured, and that’s important.

But critics like former EPA Administrator Gina McCarthy disagree. McCarthy, along with former EPA official Janet McCabe, stated that the plan would prevent the use of reliable, peer reviewed articles that are based on personal heath data gathered from individuals with guarantees that it would remain private. These types of studies have long been used to set environmental and other regulatory standards in the United States. If EPA decides that it can no longer justify their use, the move could have broad impacts on all federal agency decisions that rely on the use of confidential human health data.

While we have not yet seen the details of Pruitt’s plan, it is likely to face legal challenges once it is implemented. A number of federal environmental statues require EPA to use the “best available science” in developing standards. There is no legal requirement that this “best available science” also show up in a Google search. But supporters of the plan argue that this level of transparency is required to demonstrate that the data is objectively sound and subject to reproduction. The magnitude of the plan’s impact will only be known when it is made public, but based on the controversy that is already brewing, we can expect that its implementation will not have an easy road.

Manufacturing Outlook: The Exclusion Process for The Steel/Aluminum Tariffs


Earlier this week, our firm sponsored a panel discussion entitled “Export Compliance for Aerospace & Defense Firms – What the OEMs Expect from Their Supply Chain” as part of Connecticut Export Week 2018.  Joanne Rapuano, Counsel in Robinson & Cole’s Trade Compliance practice, moderated the discussion.  The panel included Matthew Borman, Deputy Assistant Secretary of Commerce for Export Administration and trade compliance officers from major aerospace and defense manufacturers.

Mr. Borman discussed something on the minds of many manufacturers, i.e., the new steel and aluminum tariffs.  He mentioned that the Department of Commerce has published information regarding those seeking exclusions from the new tariffs.  As mentioned by the Department of Commerce, in determining whether to grant an exclusion, “the Secretary will consider whether a product is produced in the United States of a satisfactory quality or in a sufficient and reasonably available amount.”  Significantly, any requests for exclusions will be published for the public to see and U.S. parties can file objections.  We have already started to receive calls about applying for exclusions.  Yet, even if your company does not apply for one, you should monitor the public filings to see whether your competitors are doing so.

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