Manufacturers Fighting Disruptive Immigration Reform

This week we are pleased to have a guest post from Jennifer L. Shanley, a member of Robinson+Cole’s Immigration Group. Her preparation of temporary and permanent immigration petitions allow manufacturing, chemical, pharmaceutical, and biotechnology companies, including some Fortune 100 companies, to retain key business people, scientists, researchers, and other professionals.

The National Association of Manufacturers (NAM), along with several prominent business organizations, filed a lawsuit in federal court to stop the Department of Homeland Security’s (DHS) regulations governing the H-1B nonimmigrant visa program that would disrupt manufacturers’ ability to hire and retain critical high-skilled talent.

By way of background DHS announced an interim final rule that revises the definition of H-1B specialty occupation to include the requirement of a specific relationship between the required degree field(s) and the duties of the offered position. It also restricts eligibility for the program in several additional ways, including requiring employers to provide contracts, work orders, itineraries or similar evidence to prove employer-employee relationship when sending H-1B workers to third party worksites, ultimately providing the U.S. Citizenship and Immigration Services (USCIS) with the ultimate discretion on who meets the definition of employer and employee. The other rule issued by the Department of Labor increased the wage floor companies are required to pay employees to historically high rates. Continue Reading

3D Printing for Manufacturers Continues to Lag Behind

Back in 2013, I wrote a blog post about 3D printing and whether it was going to be the next “big thing.”  At the time, the commentary within manufacturing circles was mixed, at best, as manufacturing leaders wondered whether 3D printing would remain a specialty process mainly used by large OEMs such as Ford, GE, etc.

Seven years later, not much has really changed.  I recently read an article in Industry Week by Avi Reichental, a CEO of a 3D printing company, that is appropriately titled “Slow and Steady Wins the 3D Printing Race.”

The article still mentions GE’s efforts to use 3D printing along with some other stock examples that you see in many articles. Mr. Reichental then goes on to say: Continue Reading

New York City and State Paid Leave Laws Mean Changes for Manufacturers

 

Effective September 30, the New York State Paid Sick Leave Law (NYSPSL Law) and amendments to the New York City Paid Safe and Sick Leave Law (NYCPSL Law) became effective requiring implementation of new leave accrual, record-keeping and reporting obligations.  Manufacturers with operations in New York State or New York City may need to update policies and records now.

The NYSPSL law, adopted at the start of the Coronavirus Pandemic in March, requires every manufacturer with employees working in New York to provide paid or unpaid leave to those employees.  The amount of leave and whether paid or unpaid depends on the size and income of the business (summarized below):

Size and Income of Manufacturer Amount of Annual Leave Paid or Unpaid
0 to 4 Employees, < $1,000,000 in annual net income Up to 40 hours Unpaid
0 to 4 Employees > $1,000,000 in annual net income Up to 40 hours Paid
5 to 99 Employees Up to 40 hours Paid
100 or more employees Up to 56 hours Paid

 

Employees begin to accrue leave on the later of September 30, 2020 or their date of employment.  Leave accrues at the rate of 1 hour of leave for every 30 hours of work.  While leave may begin to accrue as early as September 30, employees are not eligible to take leave until January 1, 2021.  Manufacturers may grant employees the full allotment of leave at the start of the calendar year but may not reduce the amount of leave once granted based on the number of hours worked.  Employees may carry over to the next year any accrued and unused sick leave, but a manufacturer may limit the amount of leave taken each year (40 hours for manufacturers of fewer than 100 employees, 56 hours for manufacturers of 100 or more employees).  Manufacturers may grant more leave than the amount required by the law.

Sick leave may be used in any reasonable increment set by the manufacturer.  Employees may use sick leave for a mental or physical illness, injury or health condition of the employee or the employee’s covered family member; for diagnosis, care or treatment of a mental or physical illness, injury or health condition of, or the need for a medical diagnosis for, the employee or the employee’s covered family member; or for an absence due to domestic violence, a sexual offense, stalking or human trafficking, or to avail themselves or a family member of covered services as a result (including civil or criminal proceedings and attendance at victim’s services organizations).

Importantly, the new sick leave benefit appears to be in addition to the Emergency Paid Sick Leave benefits provided by the federal government beginning on April 1, 2021 under the Families First Coronavirus Response Act (FFCRA).  The new sick leave benefits are also in addition to New York Emergency COVID-19 Paid Sick Leave Law adopted in March 2020.  Cumulatively, this means every manufacturer in New York must conform existing leave policies.

While the NYPSL law does not require manufacturers to allow employees to begin using leave until January 1, 2021, manufacturers must begin tracking leave as of September 30.  Upon request, a manufacturer must provide an employee within three  business days with information about her or his leave accrual and use.

New York City Amends Local Law to Conform   

Following New York State, effective September 30, 2020, the New York City Council amended the NYCPSL Law to conform to the New York State law.  In doing so, however, the City Council expanded paid sick leave benefits for domestic workers and imposed additional obligations on manufacturers with respect to their employees located in New York City.

The Amended New York City law requires manufacturers to provide employees either in their paystubs or in a separate document with both the amount of sick time earned and used during the pay period, as well as the current leave balance.  Manufacturers must provide and post written notice of the amended law to all employees within 30 days of its effective date (i.e., by October 30, 2020) or the employee’s date of hire (whichever is later).  This written notice must be posted and provided to employees in English and the primary language of the employee.  Significantly, with the amendment, New York City abolished the requirement that covered employees work in New York City at least 80 hours per year, meaning that manufacturers much track the work hours of even casual or part-time employees.

In addition, the New York City law now provides for up to 40 hours paid sick leave for domestic workers regardless of the number of employees or the manufacturer’s net annual income level.  This change represents a substantial increase in the amount of leave available to domestic workers, as the prior  version of the local law provided two days of paid sick leave per year.  (New York State’s Domestic Workers Bill of Rights provides for up to three days leave for domestic workers, although not specifically for sickness.)

While the amendments became effective in September, a manufacturer need not allow employees to use the extended leave benefits until January 1, 2021.

Unanswered Questions

These new leave laws present a host of unresolved issues for manufacturers.  Neither law addresses the issues presented by manufacturers with operations outside of New York State.  In assessing the amount of leave to provide employees, do employees working outside of New York State or City count toward determining the amount of leave to provide employees?  Furthermore, for employees working both in and out of New York State and City, for leave accrual purposes, do manufacturers count all time worked or only the time spent in the particular jurisdiction.

Many are hopeful that the New York Department of Labor and/or the New York City Department of Consumer Affairs (the agencies with authority to issue implementing regulations) will provide guidance soon.

Given the complex interplay between the federal, New York State and New York City leave laws, employers of New York State or City employees may wish to confer with qualified legal counsel now to comply with notice obligations and harmonize leave policies.

OFAC Issues Advisory on Sanctions for Facilitating Ransomware Payments

On October 1, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an advisory “to highlight the sanctions risks associated with ransomware payments related to malicious cyber-enabled activities.”

The advisory acknowledges that the incidents of ransomware attacks on U.S. companies have risen during the COVID-19 pandemic. Although the advisory does not mention that companies have been paying ransoms when they are victimized, it has been publicly reported that companies have paid ransoms, particularly when data has been exfiltrated and the cybercriminals are threatening to post the data online unless a ransom is paid for confirmation of destruction, as is the scheme used by Maze. Continue Reading

OSHA Review Commission Issues Decisions on Machine-Guarding Violations

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

Manufacturing equipment can be dangerous. Hazards associated with manufacturing equipment can come in a variety of forms, such as pinch points, sparks, or flying debris. OSHA regulations require equipment with moving parts to have specific protection mechanisms in place – often referred to as machine guarding. Machine guarding can take many forms, such as barriers, light curtains, and two-hand trips.

In 2019, the last year for which complete data is available, machine guarding violations were in OSHA’s top 10 most cited violations, as well as OSHA’s top 10 list for “serious” violations and for “willful” violations. Of the 1,969 machine guarding violations OSHA issued citations for between October 1, 2018 to September 30, 2019, 1,737 were classified as “serious” and 13 were classified “willful”.

However, not all of these citations become final, or at least not in the form issued. Some employers choose to challenge citations to OSHA’s Review Commission. For those not familiar with OSHA’s Review Commission, it is a three Commissioner panel appointed by the President and confirmed by the Senate. The Commission hears appeals of contested OSHA cases. Contested cases can take a while to work their way through OSHA’s contest case process and receive a decision from the Commission. The three cases discussed below involved citations issued in 2014 and 2016. Continue Reading

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

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