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.

Government Initiatives in Response to Wave of Harassment Allegations Challenge Manufacturers

Two recent developments, generated from the tidal forces of the #MeToo movement should get manufacturers’ attention.

On December 22, 2017, Congress adopted a comprehensive tax reform law.  Included in the statute is an amended Section 162(q).  That provision states that manufacturers may no longer deduct from federal income tax “(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement [“NDA”], or (2) attorney’s fees related to such a settlement or [p]ayment.”

Written broadly and without any significant legislative analysis, Section 162(q) arguably sweeps within its reach “plain vanilla” severance or separation agreements.  Typically, most severance agreements contain broad waivers and releases of claims, including gender-based discrimination claims, in exchange for payment of severance.  Such agreements typically include NDA provisions.  Because “sexual harassment” or “sexual abuse” are not separate statutory claims under most discrimination statutes, but simply labels for a more egregious form of gender-based discrimination, any waiver or release of a sexual discrimination claim which contains an NDA may be impacted by Section 162(q).  Further, Section 162(q) makes clear that attorneys’ fees payments “related to” such a settlement similarly may not be deducted.  This limitation may include payments to the manufacturer’s own legal counsel.

Before we could digest the full impact of this tax law change, on February 11, New York Attorney General Eric Schneiderman filed a 38-page, 143-count complaint against Harvey Weinstein, Robert Weinstein and their company, the Weinstein Company LLC.  The complaint alleges a pattern and history of sexual harassment and abuse by Harvey Weinstein, and a failure to act to prevent or remedy such conduct by the other defendants.  In his press release, Attorney General Schneiderman admits he filed the lawsuit to prevent a planned private sale of the Weinstein Company to other investors.  “Any sale of The Weinstein Company must ensure that victims will be compensated, employees will be protected going forward, and that neither perpetrators nor enablers will be unjustly enriched.”

These two developments potentially signal a new front in efforts to combat workplace harassment in this #MeToo era.  While most of the national media has focused on the impact of #MeToo in the entertainment and technology sectors, manufacturers have not been immune.  See “How Tough Is It to Change a Culture of Harassment? Ask Women at Ford,”  New York Times (December 17, 2017) available at https://www.nytimes.com/interactive/2017/12/19/us/ford-chicago-sexual-harassment.html (last accessed February 14, 2018).

Rather than find themselves on the receiving end of unwanted publicity, litigation or tax challenges, manufacturers may wish to proactively examine their policies, practices, reporting procedures and safeguards to ensure their workplaces are ready for the next chapter.

EPA to Defer to States on Enforcement

In our 2018 outlook, we told you about the trend towards cooperative federalism—EPA’s plan to “rebalance the power between Washington and the states to create tangible environmental results for the American people.” Early in 2018, EPA has already taken steps towards putting cooperative federalism into practice.

At the end of January, EPA Assistant Administrator for the Office of Enforcement and Compliance Assurance (OECA) issued Interim OECA Guidance on Enhancing Regional-State Planning and Communication on Compliance Assurance Work in Authorized States. The interim guidance focuses on a number of topics to increase collaboration between EPA and States authorize to implement federal environmental programs.

The interim guidance makes it clear that EPA will generally defer to States to implement delegated federal programs, except in specific situations. Examples of these specific situations include:

  • Emergency situations, or situations where there is a significant risk to public health and the environment;
  • Significant noncompliance that has not been addressed by the State;
  • Actions to address widespread noncompliance in a sector or program, such as EPA’s National Enforcement Initiatives;
  • Responses to State requests for assistance; and
  • Serious violations that need to be investigated by EPA’s criminal enforcement program.

According to the interim guidance, when EPA identifies violations at a facility, but the State wants to take the lead on enforcement, EPA should defer to the state unless its involvement is specifically warranted.

The interim guidance also encourages periodic meetings between EPA and States to share information regarding compliance and enforcement priorities and how to share resources efficiently. For example, the guidance suggests that EPA and States could share lists of facilities planned to be inspected over a particular time frame and discuss whether those inspections would be conducted by EPA or the State. With regard to specific enforcement matters, EPA and the States should communicate to ensure that the State has a clear understanding of what EPA considers to be a timely and appropriate response. If senior leadership at EPA and the State disagree on how a matter should be handled, it should be elevated to the OECA Assistant Administrator for a decision.

EPA plans to update the interim guidance as necessary in 2019, based on recommendations of a work group aimed at improving state and federal collaboration in compliance assurance.

2018 Employment Law Predictions for Manufacturers

As has been our tradition, January is the time to predict the big developments in the coming year that will impact manufacturers.  In January 2017, notwithstanding my “Lawyer’s Shrug,” I predicted Congress was unlikely to raise the minimum wage, but states and cities would attempt to do so; the National Labor Relations Board would turn back to Republican control and begin the roll-back of Obama-era advances; more multi-employer pension plans would become insolvent and put pressure on the Administration; and Congress would not give guidance on immigration reform, but the Administration would launch some high-profile workplace raids to pressure employers not to hire undocumented workers. In my opinion, three out of four is not bad.  (No sign of pressure on the multi-employer pension front.)  Manufacturing Law Predictions for 2017:  Labor and Employment

Here is my take on 2018.

States and cities will continue to fill the void where Congress fails to act, leading to even more challenges for manufacturers with multi-state and multi-city operations.

The #MeToo movement will put increasing pressure on manufacturers to enact robust harassment prevention and investigation protocols.  Anyone waiting for that pendulum to swing back may be in for a long wait.

The Trump Administration will rush forward with more Obama-era repeal efforts as quickly as possible, as Republicans in Congress face some pretty challenging public opinion numbers in anticipation of the November 2018 Congressional elections.

The National Labor Relations Board will seek to repeal the Quickie Election Rule and may implement additional procedural changes to the block the reimplementation of that Rule by Congressional action in future years.

Like all things, however, I am sure 2018 will give manufacturers some unexpected surprises.  Keep your friends close and the employment lawyers closer!

LexBlog