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.

N.L.R.B. “Joint” Disarray – Why That Matters to Manufacturers

Winston Churchill allegedly once said, “lovers of sausage and public policy should not watch either be made.”  Recent events at the National Labor Relations Board call that apt quote to mind.

In its zeal to overturn Obama-era precedent, the Trump N.L.R.B. seems to have stepped right into it – creating confusion and uncertainty for manufacturers and others.

In December, I wrote that the N.L.R.B. had suddenly overturned several important decisions issued by the Obama-N.L.R.B. on narrow three-to-two partisan votes.  One of those decisions addressed the circumstances under which two companies would be considered to be the “same employer” for traditional labor law purposes.  In Hy-Brand Industries, the Board overturned the decision in Browning-Ferris Industries (which held that two employers could be considered to be the same employer when one exerted “indirect control” of labor relations on the other, even if that power was never exercised).  The Board announced it was returning to the pre-Browning-Ferris test by which two companies would only be considered to be the same if one exhibited “direct and immediate control” over the employees of the related company.  See  “The Trump N.L.R.B. Gift Giving Season.”

On February 9, 2018, however, acting on a complaint filed by several unions and their counsel, the N.L.R.B.’s Inspector General issued a report finding that Board Member William Emanuel, one of the three Board Members in the Hy-Brand majority, should not have participated because his former law firm represented one of the parties on the losing-side in Browning-Ferris case.  Inspector General’s Report.  On February 26, a three-member panel of the N.L.R.B. issued an order withdrawing the decision in Hy-Brand and reinstating the Browning-Ferris “indirect control” test.

Unfortunately, this back-and-forth has achieved little but to plant confusion and uncertainty into matters critical to manufacturers.  Whatever standard finally applies has real consequences for manufacturers.  Manufacturers often have complex, negotiated arms-length agreements with suppliers, distributors, agents and others.  Those relationships – already complex because of regulatory compliance and quality assurance demands – require the legal underpinnings of them to be certain, clear and understandable.  Even now manufacturers are negotiating these agreements under a cloud of uncertain legal standards.

Unfortunately, the Board’s on-again, off-again decision making only promises more litigation for the foreseeable future.

Manufacturers currently negotiating agreements with up- or down-stream companies should confer with qualified legal counsel to assess the risks and benefits of their unique contracts.

Court Upholds Unlimited Look Back Period for OSHA Repeat Violations

The Occupational Safety and Health Act provides for increased penalties when an employer repeatedly violates a standard. While there is no specific time frame established in the statute for how long OSHA can look back for a repeat violation, OSHA guidance and policy documents generally state that the agency will classify a violation as repeated only if it is being issued within five years of the previous citation. That policy, however, is not legally binding, and a federal court recently held that the look back period for repeat violations is not so limited.

In Triumph Construction Corp. v. Secretary of Labor, Triumph was cited for violating an OSHA excavation standard. The citation was classified as a repeat violation based on two prior violations of the same standard—one in 2009 and one in 2011. Triupmh challenged the citation, in part because OSHA violated its own look back policy, which was three years at the time. Triumph argued that “the Commission failed to provide a reasoned explanation for relying on previous violations more than three years old.”

The Court saw no reason to require a “reasoned explanation.” While an OSHA Field Operations Manual noted that a general, three year policy for repeat violations should be followed,

“there are no statutory limitations on the length of time that a prior citation was issued as a basis for a repeated violation . . . .”

The Court noted that the Manual is “only a guide . . ., not binding . . ., and [does] not create any substantive rights for employers.”

The ruling calls into question an employer’s ability to rely on OSHA guidance and policy interpretations. While OSHA states that it will generally use a five year look back period, there is no guidance to indicate the circumstances under which they will depart from that general standard. And the Court’s ruling in Triumph seems to indicate that OSHA does not need to provide such guidance. Because the statute does not provide a limit on the look back period, employers should be prepared to face repeat violations regardless of how much time has passed since the original citation.

The case is Triumph Construction Corp. v. Secretary of Labor, 2d Cir., No. 16-4128.

 

How manufacturers are faring under Trump, globally

Now that the first year of the Trump administration is behind us, I had the opportunity to write an article for the Hartford Business Journal regarding trends that are developing in 2018.  To read my article, please click here.  Topics covered include deregulation efforts, the Foreign Corrupt Practices Act (FCPA), the False Claims Act (FCA), the General Data Protection Regulation (GDPR), and sexual harassment claims and prevention.

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