This post was co-authored by Labor + Employment Group lawyer Christopher Costain.

With fall approaching and school back in session, the end of 2025 is on the horizon. The beginning of the new calendar year serves as an opportune time for manufacturers to revisit their wage and hour practices for compliance with applicable state and federal law; below are several important reminders of such laws that may impact Connecticut employers.  

Connecticut’s Minimum Wage Increasing to $16.94 Effective January 1, 2026

Beginning January 1, 2026, Connecticut’s minimum wage will increase from the current rate of $16.35 per hour to $16.94 per hour. The increased minimum wage is required pursuant to Public Act 19-4, which was signed by Governor Ned Lamont in 2019 and requires the state minimum wage to be adjusted annually based on data published by the U.S. Department of Labor. To prepare for the increase in minimum wage, manufacturers should determine which employees will need to receive an increase in their hourly rate to meet the new minimum wage and ensure new hires are receiving wages that are at or above minimum wage. Manufacturers with employees in multiple states should review applicable minimum wage laws to ensure compliance.

Lastly, manufacturers should ensure that their workplace posters reflect the correct minimum wage.

Exempt/Non-Exempt Status

Manufacturers should also consider conducting a review of employee salaries to ensure employees who are classified as exempt are making a salary that is at or above the salary threshold under applicable state and federal law. The current minimum salary that most executive, administrative, and professional workers must be paid in order to be exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA) is $684 per week or $35,568 annually. Additionally, manufacturers should be aware that in other states and locales, the minimum salary thresholds are significantly higher than the FLSA threshold (such as at $1,237.50 per week or $64,350 annually in New York City).

Permitted Payroll Deductions

Manufacturers in Connecticut should consider reviewing the deductions taken from employee wages to ensure they are either taking only those deductions allowed under federal or state law, such as federal and state income tax, or that they have received special permission from the Connecticut Department of Labor (CTDOL) to make a separate deduction, using the CTDOL’s approved form. Examples of other types of separate deductions include the costs to replace broken equipment, tools, or machinery, the cost for a required uniform, or other items necessary for employment.

Connecticut Paid Sick Leave Eligibility Expansion Continues in 2026

The Connecticut Paid Sick Leave law was amended significantly beginning January 1, 2025, expanding the scope of employers covered by the law, increasing the number of workers eligible for leave, and broadening the qualifying reasons for the use of leave, among other key changes. Currently, employers with 25 or more employees are subject to the law but starting January 1, 2026, employers with 11 or more employees in Connecticut will be subject to the law and in 2027, all employers in Connecticut will be subject to the law. To determine whether paid sick leave must be provided to workers beginning January 1, 2026, manufacturers should review their payroll for the week that contains January 1 to confirm whether they meet the 11-employee minimum threshold.

Manufacturers should consult competent employment counsel for assistance with ensuring compliance with these wage and hour and other important employment law issues. 

I recently had the opportunity to speak with Susan Poeton, Editor of Industry Today, one of the leading U.S. manufacturing industry trade publications, for its “Industry Insights” podcast. During the episode, Susan and I focused on three primary issues impacting manufacturing now and likely into 2026:

  1. Implications of tariffs,
  2. Supply chains under stress, and
  3. How technology is transforming how manufacturing companies operate

Drawn from my experience with clients around the globe, I share insights on how manufacturers can adapt to shifts in workforce, embrace innovation and stay competitive in a changing landscape.

Listen here:

This post was co-authored by Labor + Employment Group lawyer Christopher Costain.

The use of artificial intelligence (AI) continues to quickly spread across the manufacturing industry, and employers are tasked with understanding and managing the impact and capabilities of this burgeoning technology. While manufacturers are using AI tools to streamline manufacturing processes, enhance productivity, improve health and safety, and create a more engaged and thriving workforce focused on high-value tasks, ChatGPT and other AI large language models (LLMs) are beginning to infiltrate other departments in the workplace, including employee communications with Human Resources, creating new challenges. Similar to how “WebMD” is often used to address and self-diagnose health issues, employees may now be turning to ChatGPT and other LLMs as advocates to advance their workplace issues.

Human Resources professionals tasked with resolving critical workforce management issues, such as administering employee leaves of absence, collecting and maintaining employee personnel information, and ensuring compliance with wage and hour laws, should be aware and remain vigilant that employees may be utilizing ChatGPT or other LLMs to communicate with Human Resources on their behalf. Human Resources professionals should carefully consider how to engage with those employees who may be using AI tools to communicate with them about legal issues with which they are unfamiliar, or even to assert legal claims.

Manufacturers should be mindful that, as with any AI tool, the ability of ChatGPT or other LLMs to produce accurate, unbiased responses is limited based on the amount of data on which it has been trained. Therefore, while an employee may be relying on ChatGPT to craft an email to send to Human Resources about leave entitlement, the information provided by the AI tool might not be accurate. Human Resources professionals should ensure that they carefully review such communications and prepare to engage the employee in a constructive dialogue regarding legal requirements and the employer’s relevant policies. A response may also require educating the employee, where the employee may be relying on inaccurate information.

In such cases, depending on the specific circumstances, employers should consider reminding employees of the employer’s policies governing the permitted use of AI tools in the workplace and the risks of using such technology. 

As the use of ChatGPT and other LLMs continues to expand together with AI tools throughout the manufacturing industry, employers are encouraged to consider ways to monitor and address employees’ use of such technologies to ensure compliance with applicable law and the employer’s policies while also strengthening employee relations.

This post was co-authored by Labor + Employment Group lawyer Christopher Costain.

As tariff talks continue to heat up and fuel heightened economic uncertainty, manufacturers are left to determine how to best manage their workforces while continuing to meet customer demands. Manufacturers seeking to weather the economic pressure may consider exploring ways to reduce labor costs whether by reorganizing, layoffs, restructuring, or other mechanisms. However, manufacturers that are considering actions to reduce their workforce should engage in careful planning and diligence to ensure that they comply with all applicable federal and state laws to minimize the legal and employee relations risks associated with such actions. Below, we will address several key legal considerations related to layoffs.

The Worker Adjustment and Retraining Notification Act

The Worker Adjustment and Retraining Notification Act (WARN Act) is a federal statute that guides employers through the process of eliminating existing jobs while also providing workers with sufficient time to prepare for the transition period and to seek new employment or training opportunities. The WARN Act requires covered employers (generally those with 100 or more full-time employees) to provide employees  60 days advance notice before “closing a plant” or conducting a “mass layoff.” A “plant closing” is a permanent or temporary shutdown resulting in the loss of employment for at least 50 employees during a 30-day period at either a single employment site or multiple facilities operating within a single employment site. A “mass layoff” is a reduction in force that is not the result of a plant closing, and results in an employment loss at a single employment site during a 30-day period for either 50 employees who comprise 33% of the manufacturer’s active employees, or at least 500 employees. Covered employers that do not comply with the WARN Act or qualify for an exception can be liable to affected employees for lost wages and benefits.

The WARN Act also includes a 90-day aggregation rule where employers must look ahead and back 90 days to determine whether there were any other employment losses. If there are two group employment losses at a single site of employment in that 90-day period, the groups will be aggregated together and the WARN Act will be triggered, even if neither group alone is large enough to trigger the act’s requirements. This is particularly important when companies are considering layoffs on a rolling or gradual basis.

To successfully comply with the WARN Act’s requirements, and minimize legal risk, manufacturers should carefully determine which workers may be impacted; evaluate whether the selection may cause a disparate impact or other risk of discrimination claims; document the decisions made once they are final; and carefully review whether the layoff may implicate WARN or an equivalent state law. If WARN is implicated, then several steps should be taken to ensure compliance with WARN’s notice and other provisions.

Even if WARN is not implicated, manufacturers engaging in layoffs should ensure that they have thoroughly analyzed their decisions in relation to disparate impact and that the decisions regarding the employees selected and not selected are based on legitimate, non-discriminatory reasons and supported by objective data. It is crucial to understand why each employee was selected and, if there was a choice between multiple employees working in the same role, exactly why the employees were selected.

In addition to the requirements of the federal WARN Act, manufacturers should be mindful that certain states have their own WARN Acts, known as “Mini-WARN Acts,” which often impose additional, more stringent obligations on employers than their federal counterpart. 

The Older Workers’ Benefit Protection Act

Another important federal law manufacturers should be mindful of when preparing for layoffs is the Older Workers’ Benefit Protection Act (OWBPA), which was passed in 1990 and amends the familiar Age Discrimination in Employment Act of 1967 (ADEA). Under the OWBPA, manufacturers offering a severance package to two or more employees in exchange for a release of claims, including those arising under the ADEA, must provide employees, ages 40 and older, at least 45 days to consider whether to sign the agreement (although they can sign at any time within that 45-day period) and seven days after the date they sign to revoke their acceptance.   

The severance agreement must also include a disclosure of the “decisional unit” of workers who were considered for the exit incentive or termination program, including their job titles and ages, and whether they were selected or not selected for layoff. The OWBPA disclosure ensures that workers aged 40 and older are provided with sufficient information to make a knowing and voluntary waiver of their claims under the ADEA.

Manufacturers considering layoffs should carefully analyze which workers are eligible for the severance package, identify those who are selected and those who are not, and document the decision-making process so that the decision-making unit is clearly defined and can withstand scrutiny in the future. 

Manufacturers should consult competent employment counsel for assistance with preparing separation agreements that comply with the ADEA and the OWBPA, as well as identifying the appropriate decision-making unit, under attorney-client privilege. 

On June 6, 2025, President Donald Trump signed two executive orders aimed at significantly reshaping the future of drone policy in the United States. One focuses on protecting national airspace from malicious drone threats, while the other seeks to supercharge the U.S. drone industry at home and abroad.

Together, these orders paint a clear picture of a dual strategy: tighten security while boosting innovation. Here’s a breakdown, without the legal jargon, of what these two executive orders mean and why they matter.

Restoring American Airspace Sovereignty: Cracking Down on Dangerous Drone Use

This executive order is all about defending U.S. airspace from threats posed by drones—especially when used by hostile actors.

The order warns that while drones can offer many benefits, bad actors have increasingly weaponized them, raising serious national security and public safety concerns. From hovering over stadiums and critical infrastructure to spying on sensitive government sites, drones have become a tool for potential harm.

The key actions in the executive order:

  • New Task Force: A special interagency task force will review the United States’ current drone policies and tech capabilities and propose solutions to improve drone defense.
  • Federal Aviation Administration (FAA) Rulemaking: The FAA will write new rules to restrict drone flights over “fixed site facilities”— think power plants, military bases, or large venues.
  • Better Geofencing Tools: FAA notices and airspace restrictions will be made available in a more open, digital-friendly format so drone systems can automatically avoid no-fly zones.
  • Law Enforcement Mandate: The Attorney General must step up enforcement of laws against reckless or criminal drone use.
  • Expanded Detection Powers: Agencies are directed to use all tools available to detect, track, and identify drones and their signals.
  • Counter-Drone Coordination: The Attorney General and Homeland Security Secretary will explore embedding drone defense into Joint Terrorism Task Forces, especially around mass gathering events like sports games, concerts, or political rallies.

This is a crackdown on dangerous or unlawful drone activity. It could lead to more enforcement, stricter no-fly zones, and tighter coordination across federal and local agencies to stop drone threats before they escalate.

Unleashing Drone Dominance: Promoting U.S. Drone Innovation and Exports

The second order flips the script. While the first one cracks down, this one opens up new doors for U.S.-made drone technology to thrive.

President Trump argues that drones are not just flying gadgets, they’re a key part of the future economy. They can improve productivity, create high-skilled jobs, and modernize transportation and logistics. To stay competitive globally, the United States must scale production, expand exports, and support homegrown innovation.

The key actions in the executive order:

  • Beyond Visual Line of Sight (BVLOS) Rules: The FAA will issue new regulations to allow drones to fly beyond the pilot’s line of sight, critical for delivery services, search and rescue, and more.
  • AI-Powered Waiver Reviews: The government will start using artificial intelligence tools to speed up the approval of drone waiver applications, cutting red tape.
  • Easing International Flight Restrictions: U.S.-based drone flights that begin and end domestically (or from U.S.-owned platforms) will no longer face manned aircraft-style rules under international law.
  • National Integration Roadmap: A new plan will guide how drones are fully integrated into U.S. airspace—from small consumer drones to delivery fleets.
  • Test Range Expansion: FAA test sites will be used more aggressively to develop and scale up next-gen drone tech.
  • Electric Vertical Take-Off and Landing (eVTOL) Pilot Program: The government will launch a program to accelerate the rollout of eVTOL aircraft (think flying taxis).
  • Supply Chain Protections: A “Covered Foreign Entity List” will identify risky suppliers, and new measures will be taken to protect the U.S. drone supply chain from foreign control or espionage.
  • Export Boost: Export control rules will be revised to make it easier to sell U.S.-made drones abroad, as long as they’re not going to adversaries.
  • Military Access to Drones: The Department of Defense will take steps to improve service members’ access to drones, possibly for training or battlefield use.

This order lays the groundwork for a full-scale push to grow the domestic drone economy, loosening rules, accelerating innovation, and taking aim at global drone markets.

Taken together, these two executive orders represent a new drone doctrine: protect U.S. skies and dominate the drone market.

  • For drone operators and manufacturers, the message is mixed but clear: follow the rules, especially around security, and the government will support your growth.
  • For regulators and law enforcement, the orders add urgency to modernizing systems, cracking down on threats, and speeding up approvals.
  • For the drone industry, it could mean faster innovation, broader markets, and a bigger push to bring manufacturing back home.

Whether you’re flying drones, building them, regulating them, or just watching from the ground, 2025 may be a defining year for how the United States handles the skies.

This post was co-authored by Data Privacy + Cybersecurity Team partner Kathryn M. Rattigan and Government Enforcement + White-Collar Defense partner David E. Carney. The post is also being shared on our Data Privacy + Cybersecurity Insider blog. If you’re interested in getting updates on developments affecting data privacy and security, we invite you to subscribe to the blog.

This post was co-authored by Labor + Employment Group lawyer Jessica C. Pinto.

Manufacturers that are covered federal contractors may be wondering when they are required to certify compliance with the affirmative action plan regulations. At this point, the answer is not clear and recent proposals from the Trump administration may explain why.

The Department of Labor’s (DOL) recently proposed budget for the fiscal year 2026 proposes to eliminate the Office of Federal Contract Compliance Programs (OFCCP), the agency tasked with enforcing affirmative action plans and proposes to transfer the OFCCP’s statutory program areas to other agencies. While the Trump administration rolled back many diversity, equity, and inclusion efforts, including revoking Executive Order 11246, which mandated affirmative action plans covering women and minorities, the statutory affirmative action requirements under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act of 1973 remain in effect. Under VEVRAA and Section 503, federal contractors are obligated to engage in affirmative action and maintain affirmative action plans for protected individuals with disabilities and protected veterans.

The DOL’s proposal includes having the Veterans’ Employment and Training Services enforce VEVRAA, and the EEOC enforce Section 503, rather than the OFCCP enforcing these regulations. The justification is that “the realignment of responsibilities will ensure consistent oversight while shrinking the Federal bureaucracy” and that Executive Order 14173: “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” “permanently remov[es] the primary basis for the OFCCP’s enforcement authority and program work.” If approved, the OFCCP would be eliminated next fiscal year, beginning October 1, 2025.

At this juncture, Congress must still approve the proposed budget, and there is a question as to whether the OFCCP can even be required to transfer its authority to other agencies.

What does this mean for federal contractors who must comply with VEVRAA and Section 503 affirmative action requirements? Employers are still statutorily required to engage in affirmative action efforts and maintain affirmative action plans regarding protected veterans and individuals with disabilities. While the future is unclear for the OFCCP, the statutory requirements still remain in effect and remain a legal obligation.

This post was co-authored by Labor + Employment Group lawyer Bryce Simmons.

Every year, private sector employers with 100 or more employees, and federal contractors with 50 or more employees who met certain criteria, are required to submit workforce demographic data to the federal Equal Employment Opportunity Commission (EEOC). Such employers may also be required to file similar reports under applicable state laws. The federal filing is known as the EEO-1 Report. While the authority for the report comes primarily from a federal statute, recent Executive Orders and changing EEOC Guidance surrounding race, gender, DEI and affirmative action have caused some employers, including manufacturers, to question what their current reporting responsibilities are for this year. To that end,  below are several key points that employers filing EEO-1 reports need to know:

  • Private employers that meet the threshold criteria noted above are still required to file EEO-1 reports. The EEOC announced that the 2024 EEO-1 Component 1 data collection opened on May 20, 2025. The deadline for submitting and certifying 2024 EEO-1 Component 1 Reports is June 24, 2025.
  • Note that this is a shorter collection period for employers and according to the EEOC, this period will not extend past the June 24, 2025 deadline.
  • Unlike past years, the EEOC will only be sending electronic notices to filers. No notifications about this collection period will be sent via postal mail. This includes letters of non-compliance after the collection period has closed.
  • Previously, employers were allowed to submit employee information under a non-binary designation. That has since been removed. Employers must report employees’ biological sex meaning they must select male or female when reporting this information.
  • Note that no organization may use the information collected in its EEO-1 report to justify treating employees differently based on their race, sex, or any other protected characteristic.

Employers subject to the filing requirement should take the steps necessary to meet next month’s reporting deadline. Employers that require assistance with EEO-1 reporting and related compliance with such laws, should consult competent legal counsel.

This post was co-authored by Environmental, Energy + Telecommunications group partners Jonathan Schaefer and Emilee Mooney Scott and is being shared on our Environmental Law + blog. If you’re interested in getting updates on developments affecting environmental regulation, we invite you to subscribe to the blog.

The U.S. Environmental Protection Agency (EPA), under Administrator Lee Zeldin, has unveiled its anticipated strategy for addressing the pervasive issue of per- and polyfluoroalkyl substances (PFAS), often referred to as “forever chemicals.” While the announcement provides a broad framework, specific details (particularly regarding potential changes to previous rulemakings under CERCLA and the Safe Drinking Water Act) remain unclear. The EPA’s strategy is built upon three core pillars: strengthening the underlying science; fulfilling statutory obligations and improving communication; and actively building partnerships with stakeholders. However, Administrator Zeldin’s approach largely echoes the core principles outlined in the EPA’s 2021 PFAS Strategic Roadmap, indicating a degree of continuity in the federal government’s focus on these persistent chemicals.

Under the “Strengthening the Science” pillar, the EPA plans to appoint a dedicated lead for PFAS efforts, implement a comprehensive testing strategy under the Toxic Substances Control Act (TSCA) to seek scientific information informed by hazard characteristics and exposure pathways, and increase efforts to collect air related PFAS data and improve measurement techniques. The agency will also work to identify and address information gaps and provide more frequent, annual updates to the PFAS Destruction and Disposal Guidance.

The “Fulfilling Statutory Obligations and Enhancing Communication” pillar outlines the EPA’s commitment to developing effluent limitations guidelines for PFAS manufacturers and metal finishers, addressing challenges with national primary drinking water regulations, and leveraging RCRA authorities to tackle releases from manufacturing operations. The EPA will also add PFAS to the Toxic Release Inventory (an existing direction from Congress), enforce existing Clean Water Act and TSCA limitations, and utilize Safe Drinking Water Act authority to address immediate endangerment. Prioritizing risk-based review of chemicals and implementing TSCA Section 8(a)(7) to collect information “efficiently” are also key aspects. Finally, Zeldin intends to work with Congress and industry to establish a “polluter pays” liability framework, with a reference to protecting “passive receivers.”

Finally, the “Building Partnerships” pillar emphasizes collaboration to advance remediation and cleanup efforts, working with states on risk assessment and tool development, and reviewing comments and determining the path forward regarding PFAS in biosolids risk assessment. The EPA will also aid states and tribes on enforcement, review state air petitions, and support investigations to hold violators accountable.

Although substantially reflective of some Biden-era initiatives, Zeldin’s plan introduces differences, such as an increased emphasis on air emissions and a single agency-wide PFAS lead instead of a council. The reference to TSCA Section 8(a)(7) also suggests potential amendments to the PFAS reporting rule. This initial announcement is presented as the first step, with further actions expected, highlighting Zeldin’s stated commitment to addressing PFAS.

This post was co-authored by Labor + Employment Group lawyer Christopher Costain.

Trees are beginning to bloom, and bees are buzzing in flower fields as spring is officially underway. As summertime approaches and temperatures continue to rise, employers should be prepared for “Spring Things,” such as navigating employee summer vacation schedules, hosting summer outings and retreats, implementing casual Fridays, and even welcoming interns. Below are a few “Spring Things” that manufacturers should consider as interns join the workplace, employees take off for summer vacations, and summer outings and other warm-weather activities get underway.

  • Use of Paid Time Off and Vacation

Employer-paid time off (PTO) and vacation policies are essential ways to increase employee morale, productivity, and retention. However, during the summer months, when employees may spend more time at the beach and engaging in recreational activities, employers should ensure that their PTO and vacation policies are applied consistently and that employees comply with all policy requirements to meet business needs. 

Employers should review their PTO policies to ensure clarity related to eligibility, notice, accrual, approval, and use. If employers identify issues, they may need to revise the policy. For example, if employees are taking vacation in 2- or 3-week increments and disrupt business operations, the policy may need to be revised so that employees may only take vacation in 1-week increments. Similarly, if exempt employees are taking half-days and not inputting their PTO use or vacation in the HRIS program, the policy may need to be updated to clarify that any time out of the office must result in the use of PTO or vacation—this issue may require monitoring. On the other hand, if employees are not using their vacation, it may be time for managers to communicate with certain team members to encourage them to use their PTO.

  • Casual Fridays, Pizza Mondays, and Summer Outings

With the return of summertime comes employer-hosted events and teambuilding-focused activities, increasing engagement and improving employee morale. While the goal of these activities is to have fun in an inclusive and safe environment, employers should consider ways to minimize the legal risks associated with these summertime workplace activities and initiatives.

Employers may implement “casual days” in the summer to bring some of the summer fun into the workplace and ensure employees stay comfortable as the summer heat gets turned up. However, manufacturers should be mindful of employee safety and consider whether certain types of footwear or other clothing could pose a safety risk (e.g., employees working on a specific machine). Further, human resources may need to remind employees, generally and individually, of the dress code policy, which contains minimum standards of professionalism in the workplace (e.g., prohibiting offensive clothing).

Manufacturers planning to hold summer outings, retreats, and other events should consider several issues before sending out the invitations. One such issue is whether employees are required to participate in a particular activity, in which case any injuries or illness could result in workers’ compensation coverage with regard to the injury/illness. Employers should also consider what events/activities will be inclusive to all employees rather than presenting a barrier to access or entry; whether alcohol will be served and, if so, how it will be managed; and what measures are needed to ensure professionalism during such events/activities.

  • Interns in the Workplace

Manufacturers may be welcoming interns into their businesses in the summer. It goes without saying that internship programs can play a key role in a company’s ability to develop and retain talent, generate new ideas and perspectives, and provide valuable mentorship and opportunity to individuals entering the field, resulting in goodwill in the professional community and the enrichment of the workplace. With these benefits come certain legal compliance challenges related to intern compensation and how internship programs are structured. Manufacturers should take the time to carefully review the administration of their internship programs now to ensure compliance throughout the summer and beyond.

One key issue is whether interns are considered “employees” under applicable law and must be paid. The question is, who is the “primary beneficiary” of the relationship – is it the intern or the employer? It can be very difficult for employers to meet the “primary beneficiary” standard. For example, if an intern is enrolled in an academic study program, is receiving academic credit, is not replacing paid employees, and is essentially working a schedule around their academic calendar, it may be possible for the intern to be “unpaid.” 

Specifically, in determining who is the primary beneficiary of the relationship, courts apply a number of factors to determine whether the intern or the employer is the primary beneficiary, including the extent to which:

  1. The intern and employer clearly understand there is no expectation of compensation;
  2. The internship provides training similar to that which would be given in an educational environment;
  3. The internship is tied to the intern’s formal education program by integrated course work or receipt of academic credit;
  4. The internship accommodates the intern’s academic commitment by corresponding to the academic calendar;
  5. The internship’s duration is limited to the period in which it provides the intern with beneficiary learning;
  6. The intern’s work complements (rather than displaces) the work of paid employees while providing significant educational benefits to the intern; and
  7. The intern and employer understand there is no entitlement to a paid job at the internship’s conclusion.

These factors are difficult for employers to meet, and in most instances, interns who are working for the summer must be paid in a manner consistent with applicable law (i.e., minimum wage and overtime).

Recently, I shared insights about the use of force majeure with Aviation Week Executive Editor Michael Bruno for his story, “Aerospace Industry Mulls Force Majeure In Wake Of Tariffs.”

In light of anticipated tariffs this year, aerospace suppliers are searching for strategies to account for higher prices in their operations and financial plans. Reviewing their contracts, they may be disappointed that force majeure may not provide the hoped for protection against a sudden spike in prices.

“The aerospace and defense community just needs to recognize that this is not the first time that somebody has tried to claim force majeure because of a tariff,” I said. “It’s not the panacea.”

I indicated that not only does the application of force majeure depend on which country you are in, but in the U.S., it depends on the state that is the venue for legal disputes. Some states take a restrictive approach and require a triggering event cited for invoking force majeure that typically includes destructive fires, labor strikes, acts of God, etc.

In the wake of the COVID-19 pandemic, I added that the industry has learned to make sure the words “pandemic” and “epidemic” are listed in their contracts and that future force majeure clauses in supplier contracts will include “tariff.” Industry seemed to be headed for a wave of force majeure invocations during COVID-19, but the wave never arrived. “In COVID-19, a lot of aerospace and defense companies did not formally send those letters in the traditional way, which was, ‘I declare force majeure, I trigger the contract provision, and I’m basically starting the clock,’” I pointed out. “They sent letters that said, ‘We might declare force majeure, and we just want to give you a heads-up warning.’ I think, just like in COVID-19, there are going to be winners and losers with respect to the ability to have those negotiations and how productive those negotiations are.” Read the article.