DOL Revises Families First Regulations

On Friday, September 11, the U.S. DOL issued revised regulations under the Families First Coronavirus Response Act (“FFCRA”).  Responding to a Federal Court’s August 4 decision invalidating four provisions in the prior regulations (see Post here), the Revised Regulations become effective September 16 and will sunset on December 31, 2020.

Adopted with lightning speed in March 2020 to respond to the Coronavirus Pandemic, the FFCRA established two separate paid leave provisions:  Emergency Paid Sick Leave (capped at 80 hours of paid leave) and Emergency Family and Medical Leave (capped at 12 weeks of leave).  Due to its emergency nature, Congress provided that these two leave provisions expire on December 31, 2o20.  Congress further directed the DOL to adopt implementing regulations with immediate effect.

When the DOL issued the original regulations in April, advocates and others attacked them in large part for being overly “business friendly.”  For example, under the original regulations, intermittent leave could not be taken absent a manufacturer’s consent.  Additionally, the regulations permitted a manufacturer to deny leave to employees for whom no work was available.  Furthermore, the Regulations defined the term “health care provider” broadly, permitting manufactures to exclude a broad array of individuals from coverage.

The Revised Regulations reinstate most of the challenged provisions, with additional explanations and justification.  For example, the Revised Regulations re-affirm that employees are not eligible for leave if no work is available (stressing that manufacturers cannot use the “no available work” defense to subvert employee leave entitlements) and re-affirm that intermittent leave is not available unless the manufacturer consents to it.  Interestingly, and somewhat confusingly, the Revised Regulations assert that when a child’s school requires the child to attend on alternating days, that schedule is not an “intermittent one,” but each day constitutes a “separate” school closing.  Manufacturers must, accordingly, grant leave to the care-giver under those circumstances.

The Revised Regulations do, however, narrow the definition of “health care provider” to more closely align the law to those whose services are directly involved with the provision of health care, even if the employee does not actually interact with the patient.

While ultimately effective for a limited period, the Revised Regulations likely will impact how manufacturers administer their FFCRA leave programs and will live on for quite some time.  Manufacturers may wish to confer with counsel of their choice to implement these new requirements.

Is Reshoring Here To Stay For Manufacturers?

There has been a lot of talk about “reshoring” in the wake of COVID-19.  Reshoring can take many forms.  It usually refers to a company moving manufacturing facilities or services back to the United States.  Other times, it means that a manufacturer will try to change its supply base and “move” it back to North America.

For some, the reshoring discussion often begins and ends with China.  One of my favorite blogs is the China Law Blog that is authored by Dan Harris and the lawyers at Harris Bricken.  They recently published a two part series on mitigating the supply chain risk when deciding whether to stay in or exit China, which was written by consultant David Alexander.

The point that David makes, which aligns with my experience, is that “[t]here is no substitute for in-person operations verification, negotiating costs, and preparation for production.”  In other words, if you have never visited your supplier in China (or frankly, anywhere), be careful.

More broadly, I encourage any manufacturer to take to heart the points made by Harris Bricken in a recent post about how to address supply chain problems that arise.  While it is fundamental that having the right contract in place is critical, the reality is that litigation with your suppliers is counterproductive in many ways and often can be avoided by proactive measures during the course of the relationship.

 

Significant Increase in OSHA Whistleblower Complaints and Caseloads Due to COVID-19

Thank you to my colleague, Jonathan Schaefer, for his contributions to 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.

Since at least March, manufacturers, and the entire U.S. economy, have been experiencing unprecedented conditions as a result of the COVID-19 pandemic. COVID-19 has not only changed where and how manufacturers operate, but also safety protocols across the board.

It will likely come as no surprise to any manufacturer, that since February there has been a significant increase in the Occupational Safety and Health Administration’s (OSHA) caseload. The U.S. Department of Labor’s Office of Inspector General (OIG) recently found that this increased caseload has resulted in the average number of days to close an investigation to increase 41 days (279 versus 238) since the OIG’s last audit. Continue Reading

NLRB Draws a Line: Polite Picket Lines, Civil Social Media and Courteous Complaining

This week we are pleased to have a guest post from Natale V. Di Natale. Attorney Di Natale is a member of Robinson+Cole’s Labor, Employment, Benefits, and Immigration Team.

Manufacturers are increasingly aware that an inclusive workplace is synonymous with one that does not tolerate abusive conduct, personal attacks or any form of harassment, especially harassment that is based on an employee’s race, sex, national origin or any other protected characteristic. Permitting such behavior and conduct not only creates an unbearable workplace, but also exposes an employer to liability. Just last month, the National Labor Relations Board (Board) finally got the message.

For too long, the Board has required manufacturers to tolerate an employee’s abusive conduct when the conduct is cloaked in Section 7 activity, i.e., union activity. Thus, the Board has permitted an employee to shout racial slurs at a co-worker because the target of the attack chose to work during a strike. The Board has also required a business owner and a manager to re-employ employees who attacked them with a barrage of profanity, including on social media, because the barrage came in the context of union activity.

In July, the Board finally reconciled an employer’s obligation to permit lawful union activity and the obligation to take corrective action to prevent harassment and abusive conduct. General Motors LLC, 369 NLRB No.127 (2020). The Board did so by establishing a new legal standard for determining whether an employer has violated the National Labor Relations Act (NLRA) when taking disciplinary action against an employee who has engaged in harassment or abusive conduct. Put simply, the Board stated that the NLRA does not protect abusive conduct, meaning that employers may discipline employees who engage in harassment or abusive conduct even if that conduct occurs in the context of “protected concerted activity.” The Board defined this type of behavior by way of example, “e.g., profane ad hominem attack[s] [and] racial slurs.” The Board will likely determine the scope of this definition in future decisions.

Of course, a manufacturer may not discriminate when taking corrective action. In other words, if a manufacturer fails to act against employees who engage in similar abusive behavior, but addresses it when it occurs in the context of union activity, the Board will likely conclude that the true reason for the discipline was the union activity, not the bad behavior.

So, when does this new standard apply? Fortunately, the Board announced that it would apply the standard in each of the instances in which civility often falls by the wayside with union interactions—communications with managers, social media posts, and activity on the picket line. Does this mean that a manufacturer should expect polite picket lines, civil social media posts, and courteous complaining from employees? Maybe not, but employers are likely to test the limits of how the Board defines this new category of unprotected, abusive activity.

Internal Investigation Leads to Potential $40 Million Clawback Effort

This week we are pleased to have a guest post from Edward Heath and Dan Brody. Attorneys Heath and Brody are members of Robinson+Cole’s Government Enforcement and White-Collar Defense Team.

McDonald’s Corporation, a Fortune 500 company and one of the world’s largest fast-food chains, was recently reminded of the value of two basic internal controls: maintaining an anonymous reporting system and conducting an internal investigation based upon information received through that system. Those two measures, which can be adopted by any manufacturing company of any size, may have saved the Golden Arches over $40 million.

Last November, McDonald’s terminated its CEO, Stephen Easterbrook, for having a consensual relationship with an employee, deeming it conduct that demonstrated poor judgment. During the termination process, Easterbrook informed the company’s Board that the relationship had been the only one of its kind. Based on that representation, McDonald’s agreed to pay Easterbrook a severance package valued at about $42 million. Continue Reading

Federal Court Expands Paid Leave Rights for Manufacturing Employees

A United States federal judge in Manhattan struck down four regulations issued by the United States Department of Labor (“DOL”) limiting paid leave entitlements under the Families First Coronavirus Response Act.  In his August 3, 2020 decision, Judge J. Paul Oetken found the DOL exceeded its authority (a) by determining that employees were not entitled to paid leave if the manufacturer determined no work was available, (b) broadly defining “health care provider” resulting in the exclusion of workers otherwise entitled to paid leave, (c) requiring a manufacturer’s consent before a worker could take intermittent leave, and (d) requiring workers to provide documentation prior to taking leave.  State of New York v. United States Department of Labor, Case No. 20-CV-3020 (S.D. N.Y. Aug. 3, 2020), available on Bloomberg Law.

Adopted by Congress and signed by the President in March 2020, the FFCRA gives manufacturing employees and others paid and unpaid leave for up to 12 weeks for designated circumstances related to COVID-19, including leave care for a child under the age of 18 whose school, place of care or child care is closed due to a COVID-19 reason.  The cost of paid leave is offset by a “dollar-for-dollar” credit on federal withholding and payroll taxes.  The law became effective April 1, 2020 and the DOL issued interim final regulations on April 6, 2020.  Because many states had already implemented mandatory “stay-at-home” orders when the law became effective, many manufacturers and others did not believe the paid leave entitlement was available to their workers.  The DOL’s regulations seemed to confirm this understanding, as the DOL took the position that workers were not entitled to paid leave if work was otherwise “not available.”

By invalidating that DOL’s interpretation, however, the Court’s decision potentially opens the door for manufacturing workers to claim retroactive paid leave.  In other words, the Court’s decision potentially means that workers were entitled to paid leave even if the manufacturer was closed because of a “stay-at-home” order or the individual was otherwise on a layoff.

Manufacturers may wish to confer with legal counsel to assess the impact of the court’s decision on past, current and future leave entitlements.

Is Your FCPA Corporate Compliance Program Up to Date? US DOJ Issues Revised Guidance

Below in an excerpt from an article authored by Robinson+Cole Manufacturing Industry team lawyers Edward J. Heath and Kevin Daly with Sasha Glassman, assistant general counsel for global materials manufacturing company Rogers Corporation, that was published on ACCDocket.com.

On June 1, 2020, the Criminal Division of the United States Department of Justice (DOJ) issued a revised version of its Guidelines for the Evaluation of Corporate Compliance Programs (Guidelines). The Guidelines, first issued in 2017 and updated in 2019, serve a critical function in federal law enforcement.

Federal prosecutors are instructed by various internal and external sources to evaluate the adequacy and effectiveness of a company’s compliance program as a part of determining whether to pursue criminal charges against that company and its personnel, as well as what kinds of resolutions of those charges may be appropriate.

The Guidelines instruct prosecutors on how to conduct that evaluation. In doing so, the Guidelines provide insight into what measures the DOJ believes are likely to deter and mitigate violations, and, in turn, may earn the company more positive treatment by prosecutors. In-house counsel and compliance officers undoubtedly will carefully consider these latest revisions and assess whether their companies’ compliance programs are up to date.

Although the Guidelines apply to all forms of compliance programs, one of the most important areas of consideration for companies doing business internationally is the US Foreign Corrupt Practices Act (FCPA).

The FCPA is the federal law that prohibits US companies from paying, offering, or promising anything of value to a foreign government official to obtain or retain business opportunities. The FCPA is a major enforcement priority for the DOJ and the US Securities and Exchange Commission (SEC), as the numbers demonstrate: In both 2018 and 2019, the federal government recovered more than US$2.9 billion through FCPA enforcement. Read the full article.

Virginia Issues First COVID-19 OSHA Standard

Thank you to my colleague, Jonathan Schaefer, for his contributions to 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.

While Federal OSHA has issued numerous COVID-related guidance documents, it has declined to issue an enforceable COVID standard. Instead, OSHA continues to reference numerous other statutory and regulatory standards that potentially apply to what OSHA may determine are COVID-related deficiencies in the workplace.

Recently, the Commonwealth of Virginia took matters into its own hands and passed the first COVID-19 OSHA standard that codifies, and in some cases exceeds, guidance from OSHA and the Center for Disease Control. Virginia is a “state-plan” state, meaning it has been approved by OSHA to develop and implement its own worker safety and health program. Virginia’s actions may be a signal to the many other “state-plan” states to do the same.

Virginia’s COVID-19 standard gives much of what is found in OSHA’s guidance documents the force of law. It requires all employers to, among other things:

  • Assess the workplace for COVID-19 hazards and classify tasks according to the risk of exposure,
  • Develop and implement policies and procedures for employees to report COVID-19 symptoms,
  • Develop and implement policies for employees with a known or suspected case of COVID-19 to return to work,
  • Ensure that employees observe physical distancing,
  • Clean and disinfect certain workplace areas;
  • Control or close access to common areas, such as breakrooms or lunchrooms.

The standard makes it clear that cloth face coverings do not qualify as PPE, but it does require them in certain instances, such as when employees are unable to physically distance or when an employee is in a customer-facing job.

Employers with job tasks that are classified as “very high” or “high,” or employers with “medium” risk job tasks and 11 or more employees must also develop and implement a written infectious disease preparedness and response plan within 60 days of the effective date of the standard.

The emergency temporary standard, which goes into effect on July 27, 2020, will expire after 6 months.

Recent State-Court Decision Manufactures Raised Eyebrows

On July 10, 2020, a New York State Supreme Court Judge issued a surprising decision finding that not only did a private arbitration agreement not bar a plaintiff’s court complaint, but that a company policy amended the parties’ previously executed employment agreement.  The decision, Newton v. LVMH Moet Hennessy Louis Vuitton Inc., Index No. 154178/2019 (Sup. Ct. New York County, July 10, 2020), has not been posted on publicly available websites but can be obtained through legal research services.  The judge’s legal analysis raised numerous issues for manufacturers.

The company employed Newton as a vice president.  In 2014, Newton signed a formal employment agreement setting forth standard employment terms and incorporating a separate arbitration agreement governing all disputes concerning Newton’s employment.  If Newton initiated an arbitration, the company agreed to pay all fees for the arbitrator and any filing files.  In November 2018, the company issued a new sexual harassment and discrimination policy stating, among other things, that an individual complaining of harassment or discrimination could file a complaint in state court as one of several methods to redress her claim.  In April 2019, Newton filed her lawsuit in state court alleging hostile environment sexual harassment, discrimination and retaliation.  Relying on the employment agreement which included a binding arbitration agreement, the company move to stay the action and compel arbitration.

The Court rejected the motion.  First, relying on a state law which expressly invalidated agreements to arbitrate sexual harassment and discrimination claims, the court ruled that the agreement to arbitrate became void by operation of law.  In doing so, the court rejected the argument that the Federal Arbitration Act (which expressly authorizes enforcement of arbitration agreements between employees and employers) superseded the state law.  Secondly, and perhaps more surprisingly, the court ruled that the company’s adoption of its policy operated to amend the written agreement between the parties.

Frequent readers will note that I have long written about the enforceability of arbitration agreements and the issues associated with them.  See, among other posts, “Protecting a Manufacturer’s Competitive Advantage” (Oct. 10, 2019); “Manufacturers Revisit Mandatory Arbitration Agreements” (July 24, 2019).

The court’s decision raises significant issues about the enforceability of any manufacturer’s employment agreement.  Usually, an employment (or any other) agreement cannot be unilaterally changed by one party.  Usually, the law recognizes that the modification of a written agreement requires both parties to agree.  But by holding that a company’s unilaterally adopted policy operated to modify previously negotiated and executed agreements, the court manufactured an unprecedented change in the law.  (We can ignore for a moment that the company likely adopted the policy because state law required it to do so.  See New York Adopts New Tools to Fight Gender-Based Harassment” (Apr. 27, 2018).)

While the Newton decision likely will be appealed, for the time being, ever manufacturer may wish to consider the impact of its changing policy on pre-existing agreements.

Testing Issues Twist Manufacturers

The Novel Coronavirus, the speed by which science continues to discover new aspects of the disease and the response of the United States government to these developments has tested manufacturers.  One aspect of this testing concerns, well, testing.

The Americans with Disabilities Act has long banned manufacturers from requiring medical evaluations unless both “job-related” and consistent with “business necessity,” high standards.  When the pandemic hit the United States and the President declared a national emergency, the EEOC had to reconsider its position.  As part of the effort to “stop the spread” of the Coronavirus, in March 2020, the EEOC announced that manufacturers could require employees to submit to body temperature monitoring, a “medical evaluation” justified by the crisis.  See “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws” (Number A.3.) (March 17, 2020).  As COVID-19 testing (testing to detect the presence of the virus) became more widely available, the EEOC updated its guidance again to permit manufacturers to require employees to submit to a COVID-19 test as a condition of permitting the employee to work.  See Id. (Number A.6.) (April 23, 2020).  Manufacturers were warned of their obligation to make sure the administered test was both accurate and reliable, and that the test could only detect the presence of the disease as of the date of the test itself.

Many viewed the EEOC’s position as signaling a willingness to allow broad employee testing when it became available to help manufacturers continue operating.

But the use of antibody testing proved to present more complicated issues.  Antibodies, many believed, were a sign that employees already had the disease, overcame it and were likely immune to reinfection for a period.  But on May 23, 2020, the CDC issued Interim Guidelines which cautioned that antibody testing could present many “false positive” results and warned, “test results do not indicate with certainty the presence or absence of current or previous infection with SARS-CoV-2.”  (The CDC subsequently issued additional guidance further explaining issues associated with “false positive” results on June 25, 2020, guidance which is available here.)

This led the EEOC, on June 17, 2020, to update its guidance holding that, in contrast to COVID-19 tests and temperature screening, manufacturers could not require antibody testing as a condition of employment.  See “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws” (Number A.7.) (June 17, 2020).

Manufacturers seeking to protect their workers may wish to carefully monitor the EEOC Guidance in this area and confer with qualified legal counsel.  Rapid developments in testing will challenge us all in the months to come.

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