As most federal contractors are likely aware, this year marked the first year when covered entities were required to certify compliance with their annual affirmative action plan requirement using the new Contractor Portal of the Office of Federal Contract Compliance Programs (OFCCP). Federal contractors (and subcontractors) that are subject to such requirements now must certify compliance as it relates to covered establishments by June 30 of each year, beginning this year. Over the summer, the OFCCP clarified several important points related to such compliance.

First, the agency explained that while the Contractor Portal remains “open,” the June 30, 2022 deadline still remains and contractors that have not yet registered and certified compliance must do so as soon as possible. Second, the OFCCP clarified that any contractor that requested assistance with registration or certification before June 30, and that is still awaiting such assistance, is deemed to have met the compliance deadline. Third, and most important for contractors, is that: 1) contractors that have not certified (including those that haven’t used the Contractor Portal to do so) are more likely to appear on the OFCCPs scheduling list (of upcoming audits) than those that have certified their compliance, and 2) contractors that have not certified compliance by September 1, 2022, will be included on a list provided to federal agency contracting officers, with the stated purpose being that the agencies then will notify the contractors of their obligations. Therefore, contractors that have not complied with the affirmative action requirements or have complied but not certified such compliance using the OFCCP’s Contractor Portal, should do so as soon as possible. Contractors that have questions about registration, certification, coverage under the law, and similar issues may wish to contact competent counsel.

Thank you to Emilee Mooney Scott for this post.  Emilee is a member of Robinson+Cole’s Environment, Energy + Telecommunications practice group.  She focuses her practice on environmental compliance, transactional and remediation matters, including matters related to emerging contaminants like PFAS.

Last week, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of a Proposed Rule to designate PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund). This marks the next step in a trend of increasing regulation of per- and polyfluoroalkyl substances (PFAS), a class of chemical substances to which PFOA, PFOS, and a number of other substances belong. PFAS have been used for a variety of applications, including firefighting foams, stain guards, and non-stick coatings, and are now widely found in the environment.

Under CERCLA, EPA has the authority to require potentially responsible parties (PRPs) to remediate sites contaminated by hazardous substances, and to recover costs from such PRPs for EPA-led cleanups. These provisions do not yet apply to PFAS because they are not CERCLA hazardous substances, but if the Proposed Rule is finalized, these familiar provisions would apply to PFOA and PFOS.  Similarly, the hazardous substance designation would allow private parties that incur costs to investigate and remediate PFOA and PFOS to use CERCLA’s cost recovery and contribution provisions to pursue other PRPs for recovery of associated costs. 

The Proposed Rule, if finalized, could have significant impacts on Superfund sites that are presently undergoing remediation or even where remediation has already been completed.  For sites being remediated now, the EPA-approved remedial plans would have been calibrated to address other hazardous substances (say, solvents) already designated under CERCLA. The addition of PFOA and PFOS as hazardous substances may require a change in plans and/or additional work to address PFOA and PFOS as well as the original drivers. For sites that have already been closed without investigation and remediation of PFOA and PFOS, designation of such substances as hazardous under CERCLA could cause those sites to be reopened and additional remedial efforts to be required.

EPA’s proposed CERCLA hazardous substance rule follows a significant reduction earlier this summer in EPA’s non-binding health advisory levels for PFOA and PFOS in drinking water. In 2016, EPA had set a non-binding health advisory level of 70 parts per trillion (ppt) for both PFOA and PFOS. In June of this year, EPA issued revised advisory levels of 0.004 ppt for PFOA and 0.20 ppt for PFOS, as well as new health advisory levels for additional PFAS GenX (10 ppt) and PFBS (2000 ppt). The health advisory levels continue to be non-binding, but EPA has signaled its intention to promulgate a final rule setting a maximum contaminant level for PFOA and PFOS, enforceable under the Safe Drinking Water Act, by the end of 2023. The proposed rule is expected later this year. 

Following publication in the Federal Register, EPA will accept public comment on the Proposed Rule for 60 days. The precise text and timing of the final rule is not yet clear and may be impacted by the volume and tenor of public comments. It also remains to be seen whether EPA will propose to designate other PFAS as CERCLA hazardous substances, and if so, which ones.

This week’s post is authored by Andrew Howey, non-lawyer intern. Andrew had a great summer with us and the post below was generated after discussions we had recently with manufacturers about how to exit distributor agreements.  Andrew’s comments were in consultation with other members of our manufacturing team.

When negotiating distribution agreements, sometimes manufacturers overlook the significance of termination clauses. After all, if you are in the process of making an agreement with a new distributor, why take the time to worry about what will happen if the agreement needs to end? Yet this mistake can often prove to be problematic for manufacturers. Frequently, manufacturers later feel the need to terminate the agreement, and must rely on vague or unfocused termination clauses.

Terminating a distribution agreement is never a pleasant process, but what if the distributor is not at fault? There are times when the distributor has upheld its side of the agreement, but the manufacturer simply wishes to find greener pastures, either with another distributor or to distribute the product themselves. When this occurs, it can leave a distributor feeling betrayed and hostile, and with a weak termination clause, this can result in drawn-out litigation that will cost manufacturers an excessive amount of time and money, in addition to killing any chances of future collaboration between the two sides. To summarize, the consequences of a poorly-written termination clause can put a manufacturer in a very bad position.

What can a manufacturer do to terminate a relationship with a performing distributor without creating animosity? Sometimes, a termination for convenience clause will exist that will allow a manufacturer to get out immediately. Oftentimes, however, such a clause will not be present (particularly with distributors that have significant leverage) and the manufacturer has to resort to claiming termination for cause and the prospect of extended hostile litigation. Lawyers that represent manufacturers often focus on the litigation aspects of these terminations by drafting long, drawn-out forum selection (i.e. where the lawsuit will take place) and dispute resolution (i.e. how the litigation will unfold) clauses. Of course, sometimes these clauses have no chance of being held enforceable in the country-at-issue. Yet even if they are enforceable, such clauses rarely function as the be-all, end-all of termination disputes. Arbitration, which is often the preferred course in distributor disputes, is costly and rarely expedient. Mediation, while slightly less adversarial, can have the same impact.

So what can be done to avoid litigation for terminating a distribution agreement when the distributor is not at fault? The key to avoiding hostility and litigation with a distributor is to find ways to disincentivize the distributor from pursuing litigation and leaving the door open to future relationships between the manufacturer and the distributor. This way of thinking about the termination as both a legal and business process will serve to both avoid the hostility that comes with prolonged litigation and to expedite the process of termination.

One method for an expedited resolution is to draft a termination clause that the distributor will view as more ideal than pursuing prolonged litigation. One possible avenue is to include the payment of an expedited resolution fee to the distributor if termination without cause is contemplated. This fee could be equal to compensation for all of the work completed by the distributor up to the date of termination, or it could equal the dollar amount of supplies sold up to the date of termination, or it could be a different number entirely. The main point is that this fee would serve to compensate the distributor for a job well done and speed up the process of resolving the relationship between the manufacturer and the distributor. There are other possible options as well – all designed to put the dispute on a defined path of early resolution. 

In the end, if you can draft a termination clause that both expedites the termination process and is generous enough to a distributor that its stipulations are favorable to prolonged litigation, you can often seamlessly terminate the resolution without the hostility and financial burden that often comes with termination.

This week’s post was co-authored by Robinson+Cole Labor and Employment Group lawyer Emily A. Zaklukiewicz.

Over the last two years, employers have followed the evolving laws and guidance issued by federal, state, and local governments and public health authorities. On July 12, 2022, the Equal Employment Opportunity Commission (EEOC) made several noteworthy revisions to its guidance to address changing pandemic conditions. Even though the COVID-19 pandemic may have subsided in various areas in the country, it is important for employers to remain up-to-date on such changes as they could have a significant impact on employers’ rights and responsibilities under the law.  

New Parameters for COVID-19 Testing

Most significant, the EEOC has altered its guidelines surrounding workplace COVID-19 testing.  Under the recent guidance, the EEOC will no longer presume that COVID-19 testing is job-related and consistent with business necessity – as required by the Americans with Disabilities Act. Instead, employers will be required to conduct an individualized assessment to determine whether present pandemic circumstances and individual workplace circumstances justify COVID-19 testing of employees. This individualized assessment is not new; the EEOC is simply returning to its pre-pandemic guidance on this issue. In those circumstances requiring an individualized assessment, the EEOC advises employers to consult current guidance from the Centers for Disease Control and Prevention (CDC) and other public health authorities. Furthermore, the EEOC instructs employers to evaluate and consider various factors including, among other considerations:

  • the level of community transmission
  • vaccination data
  • information regarding variants
  • the speed and accuracy of testing
  • the types of contacts between employees and others in the workplace (e.g., whether vulnerable populations are involved)
  • the potential impact on operations if an employee enters the workplace with COVID-19

The EEOC’s revised guidance also reemphasizes that, consistent with current CDC guidelines, antibody tests are not indicative of a current COVID-19 infection and should not be used to determine whether an employee can re-enter the workplace.

Other COVID-19 Screening Still Permissible

Notwithstanding the EEOC’s new guidelines surrounding COVID-19 testing, the EEOC reiterates that employers may continue screening employees who are physically entering a worksite with regard to COVID-19 symptoms or diagnoses, but should not screen employees who are working remotely or not physically interacting with coworkers or others.

In addition, the EEOC clarifies that employers may screen job applicants for COVID-19 symptoms after making a conditional job offer, as long as it does so for all employees entering the same type of job. However, an employer may only withdraw a conditional job offer because an applicant tests positive for COVID-19, has symptoms of COVID-19, or has been recently exposed, if three conditions are met:

  1. the job requires an immediate start date;
  2. CDC guidance recommends the person not be in proximity to others; and
  3. the job requires such proximity to others, whether at the workplace or elsewhere.

According to the EEOC, employers may also screen applicants for COVID-19 during the pre-offer stage, but only if the employer screens everyone (including visitors) for symptoms of COVID-19 before entering the workplace, the applicant needs to be in the workplace as part of the application process, and the screening is limited to the same screening that everyone else undergoes.

Lastly, according to the EEOC’s guidance, employers may require employees to provide a doctor’s note clearing them to return to work after having COVID-19. Employers are reminded that they may also rely on other alternatives to determine whether it is safe for an employee to return to work (e.g., following current CDC guidance).

***

The EEOC’s updated guidance might signal a return to the pre-pandemic guidelines, standards, and enforcement of the agency. Over the last two years, the guidelines and rules changed rapidly in the face of a global health crisis, and many of the restrictions around the collection of medical information and medical testing and exams were significantly relaxed. Over the next few months, these guidelines and rules may change, and if they do, employers should ensure they are up-to-date with the guidelines and rules and that all policies and protocols, especially screening and testing protocols, are consistent with the most recent guidelines and rules.

This post is also being shared on our Environmental Law+ blog. If you’re interested in getting updates on developments affecting environmental law, we invite you to subscribe to the blog.

Below in an excerpt from an article authored by Robinson+Cole Manufacturing Industry Team lawyers Edward J. Heath and Kevin Daly that was published by IndustryWeek.

Since March 2022, U.S. companies doing business internationally have faced governmental sanctions imposed in response to Russia’s invasion of Ukraine. Controls affecting interactions with Russian, Belarussian and Ukrainian companies and individuals have created layers of challenges to be resolved. 

As the war in Ukraine persists, many U.S. businesses are evaluating how best to proceed. A clear-eyed assessment of the scope of the new sanctions is essential to understanding how to navigate them in the months, and possibly years, ahead. Moreover, there are techniques available that companies may wish to consider as they evaluate opportunities in light of current and evolving restrictions. Read the full article.

Below is an excerpt of an article co-authored with Jon Schaefer and published in Industry Week on July 8, 2022.  Jon focuses his practice on environmental compliance counseling, occupational health and safety, permitting, site remediation, and litigation related to federal and state regulatory programs.

Last week, the U.S. Supreme Court issued its decision that the Environmental Protection Agency exceeded its authority under the Clean Air Act in its attempt to regulate greenhouse gas emissions from power plants.

While the immediate impact of the decision in West Virginia v. Environmental Protection Agency is fairly limited, the court’s rationale has the potential to impact federal agency authority across a broad range of sectors.  

The West Virginia case involved a challenge to the Obama administration’s Clean Power Plan and its successor, the Affordable Clean Energy rule. Under those policies, the EPA sought to regulate carbon dioxide emissions from power plants.

The Clean Air Act allows EPA to set certain emissions limits based on what is achievable through the “best system of emission reduction.” The limits in that best system” were based in part on transition of energy production to cleaner energy sources—including “cap and trade” economic incentives for reducing emissions—and would have had a direct impact on the ability of legacy coal-fired power plants to meet requirements and continue operating.

The Supreme Court ruled that the EPA exceeded its authority to enact an emissions reduction program based on a shift in power generation from one source to another. The ruling does not necessarily limit the EPA’s authority to regulate greenhouse gases; it just limits its ability to regulate greenhouse gases using a “system” that calls for a shift in how the power is produced. Read the full article.

This week’s post was co-authored by Robinson+Cole Labor and Employment Group lawyer Emily A. Zaklukiewicz.

With the arrival of summer, employers may be planning summer activities and offering other benefits or incentives to their employees. Manufacturers, whose employees have been frontline workers for over two years, may be particularly interested in providing such benefits to thank employees for their service. As part of the planning and implementation process of such benefits, employers should understand the relevant legal risks of such actions and steps available to minimize those risks.  

Summer events, outings, and similar activities can create risks in situations in which employees and managers are more relaxed and engaging outside the typical workplace environment. Before such events occur, employers should clearly communicate the relevant expectations of behavior, which may include reminders that all workplace rules and policies remain in full force and effect, regardless of where the activity occurs. Likewise, employers should ensure that supervisors and managers model appropriate behavior and are properly trained on how to address concerns or complaints that may arise during such events. Employers planning to have alcohol served at such events and activities should determine whether there are ways to limit consumption (e.g., drink tickets), best practices for controlling such service, whether any relevant insurance or licensing is necessary, and whether travel arrangements may be necessary to ensure employee safety, among other issues. Lastly, employers should be familiar with current laws and guidance regarding COVID-19 that might be applicable to safely hosting such events.

With regard to events that include physical activity – and events generally – employers should evaluate whether they may be subject to any workers’ compensation obligations, especially where the activity may be considered as occurring within the “course or scope” of employment. To minimize potential liability, employers may consider asking employees to sign a document acknowledging that the activity is completely voluntary and confirming that the employee is assuming certain risks in choosing to participate. Also, employers should consider activities and events that are inclusive of all employees and may appeal to employees broadly and that do not require knowledge of a sport or activity or specific physical ability or skill.

Lastly, manufacturers may choose to provide incentives or benefits to employees, especially this year when such employers may wish to convey appreciation to their frontline workers. For example, manufacturers might choose to implement shortened workweeks or workdays during the summer months by implementing programs permitting employees to leave early on Friday or take off that day in the summer. Similarly, employers may be contemplating offering free tickets to sporting events or concerts, meal vouchers, or other free items.  Other employers might revise their paid time off/vacation policies to increase flexibility.  For all such policies, it is important to ensure that changes to leave and benefits are consistent with applicable law, including as it relates to employment, benefits, and tax laws, and policies and benefits are applied or provided fairly and consistently.

Earlier this month, EPA set new lifetime health advisories for four per- and poly-fluoroalkyl substances (PFAS) – in some instances at levels lower than those that can be detected through laboratory testing. The new health advisories are listed below:

PFASHealth Advisory (in parts per trillion)
PFOA (perflurooctanoic acid)0.004 ppt
PFOS (perfluorooctane sulfonic acid)0.02 ppt
GenX (hexafluoropropylene oxide (HFPO) dimer acid and its ammonium salt)10 ppt  
PFBS (perfluorobutane sulfonic acid and its potassium salt)2,000 ppt

EPA’s previous health advisories for PFOA and PFOS were 70 ppt (individually or combined), so these new, interim advisories are significantly lower. The advisories for GenX and PFBS are completely new. And all are getting attention.

The health advisories are not enforceable standards; however, in EPA’s own words, they “provide technical information that federal, state, and local agencies can use to inform actions to address PFAS in drinking water, including water quality monitoring, optimization of existing technologies that reduce PFAS, and strategies to reduce exposure to these substances.” Indeed, some states adopted drinking water regulations based on EPA’s now outdated 70 ppt health advisory for PFOA and PFOS.

According to EPA, it reviewed over 400 human epidemiological and animal toxicity studies in determining the health advisories for PFOA and PFOS. GenX and PFBS have not been as extensively studied to date, and those advisories appear to be based only on animal toxicity studies. EPA acknowledged that, for PFOA and PFOS, the levels are set at “near zero” and “below EPA’s ability to detect at this time.” However, it claims that new science and a consideration of lifetime exposure (including PFAS exposure from sources other than drinking water) support “aggressive” action.

EPA plans to develop a proposed National Drinking Water Regulation for PFOA and PFOS by the end of 2022. This proposed regulation will include a Maximum Contaminant Level (MCL), which is almost certain to be well above the health advisories EPA just established for these compounds. If adopted, the MCL for PFOA and PFOS would become an enforceable standard for drinking water. EPA also indicated that it is considering actions to address other PFAS, or groups of PFAS, beyond PFOA and PFOS.

Over the years, I have written a lot about manufacturing disputes and how to resolve them short of litigation. The first step often is looking at what the parties have agreed to in any applicable contracts about how to notify, assess, and potentially resolve disputes.

As a general matter, dispute resolution clauses are often more detailed in long-term agreements than in a company’s standard terms and conditions. Most manufacturers have “choice of law” provisions in their contracts (i.e., what law will apply to any dispute). Sometimes manufacturers have “forum selection clauses” in their contracts (i.e., where will any lawsuit be litigated). As I have noted previously, there is a difference between these two clauses and you need both in your contracts. Don’t fall into the trap of having one but not another.

Some manufacturing contracts have mandatory arbitration provisions. I could spend pages talking about the pros and cons of arbitration. Yes, it often has the benefit of confidentiality, but no, it often is not faster or cheaper than traditional litigation. Ultimately, whether to include an arbitration provision is a case-by-case determination.

One area that I have been thinking about more lately is the value of requiring pre-litigation discussion amongst the business leaders. Often, contracts will say that if there is a dispute, once one side notifies the other there will be several required discussions to try to resolve the dispute short of any formal legal proceeding. The objective of these meetings makes sense: let the business leaders talk before the lawyers get involved.

The problem is that, most times, once a manufacturer notifies the other formally of a dispute under a contract, the dispute has gone beyond one that can be easily rectified via a phone call. Therefore, I am not convinced these types of requirements are really helpful. In my experience, they often delay dispute resolution because of the various hurdles just to schedule business to business meetings and then executive level meetings and then mediation. I am not saying that there are not circumstances where such provisions are helpful. All I am saying is that you may want to think about whether they actually make sense in the specific contract you are negotiating. These types of provisions should not be viewed as boilerplate to always be included.

With pro-union sentiments at heights not seen in decades and a union-friendly political climate, union representation petitions are up 57 percent. Employers should understand the significance of unionization and ensure their businesses, operations, and supervisors are ready. At noon on Tuesday, June 14, Robinson+Cole will host a webinar where Labor and Employment Group lawyers Natale DiNatale, Abby Warren, and Emily Zaklukiewicz will cover what it means to have a union, the union organizing process, the signs of a union organizing drive, and the important steps an employer can take now to be ready in the event of a union organizing drive.

For more information, including registration, please contact events@rc.com.