The Future of Business Relations in Cuba – Commentary from a Seasoned Customs Attorney

cuba_800_11429Since the December 2014 reopening of diplomatic relations, access to Cuba has been greatly widened, with new changes to regulations taking place as recently as late January.  These developments signal opportunities for legal service providers to assist clients who are seeking advice on business development opportunities in Cuba. However, effective advising requires a thorough understanding of the history of the U.S. embargo on Cuba and the changes in the laws themselves.

Peter Quinter, Chair of the Customs and International Trade Law Group at GrayRobinson P.A., offers a unique perspective regarding U.S. and Cuban relations as a former attorney in the Office of Chief Counsel for U.S. Customs in Miami. As a South Florida resident surrounded by the stories about the 1959 Cuban Revolution and Fidel Castro, Peter was fascinated with the unique relationship between the two countries. As an attorney with U.S. Customs, he was also responsible for enforcing the U.S. embargo of Cuba. I recently had the opportunity to discuss his perspective on the progress of reopening relations with Cuba following his participation in a panel discussion at the recent Marketing Partner Forum.1

Since the imposition of the U.S. embargo on Cuba 55 years ago, Cuba’s economy has remained relatively stagnant in growth. I was initially focused on the idea that only the U.S. refused to trade with Cuba, and that despite access to everywhere else in the world, their economy did not grow. Mr. Quinter corrected my assumption, stating “[t]here were multiple embargoes, but they disappeared long ago. Only the U.S. retains the embargo, and it was U.S. policy to punish any country doing business with Cuba.”  In fact, the UN General Assembly has nearly unanimously voted to condemn the embargo every year since 1992. The U.S. only garnered support from one other nation –Israel– in the most recent vote on the embargo in October 2015.

Despite the standing embargo, the U.S. is now poised to begin contributing to the significant growth of the Cuban economy. Although most U.S. companies are still prohibited from doing business in Cuba, the relaxed rules and opening of embassies in D.C. and Havana have allowed a few major companies to start doing business in Cuba including Verizon, Netflix, and AirBNB. Mr. Quinter believes many industries have the opportunity to rapidly develop in Cuba due to the expansion of diplomatic relations: “Logistics, warehousing, hospitality, aviation, travel agents, sports, education..to name a few.” These developments signal new opportunities for U.S. law firms to advise companies in their up-and-coming dealings in Cuba.

Like business dealings in any country, it is imperative to understand and work within the laws of Cuba’s socialist government. Mr. Quinter’s extensive experience in advising clients on OFAC regulations and policies (Office of Foreign Assets Control) for 26 years makes him uniquely positioned to comment on the current state of U.S. law firm involvement in this rapidly evolving area. During the presentation, he stated that few firms are approaching this opportunity in the appropriate manner. In our follow up discussion, he called attention to this error: “Suddenly, numerous law firms are ‘experts’ in this, and are attempting to be business brokers, instead of legal advisors.”

As a legal advisor, Mr. Quinter elaborated that law firms’ focus should remain on advising U.S. persons and companies about the relevant legal requirements that allow these entities to travel to, trade with, or invest in Cuba. A major part of this practice is determining whether a license is required to do any of these things, and if so, obtaining the license from the U.S. Treasury for the client. Once the appropriate license is obtained, then the firm will need to assist the client in working with the Cuban government.

Law firms can add value to their practice by beginning to form new partnerships now so they can be better equipped to help their clients establish businesses down the line. Mr. Quinter advises that traveling to Cuba, experiencing the culture, and introducing themselves to the community is an excellent way for law firms to equip themselves to guide clients who are looking to do business in Cuba. In May 2015, Mr. Quinter, as Chair of the Florida Bar’s International Law Section, led the largest lawyer delegation ever to visit Cuba. While the group was in Cuba, they met with lawyers, journalists, and dissidents to get a better lay of the land and to help move toward opening up business relationships. Mr. Quinter has since returned to Cuba in October 2015 on behalf of a client meeting with government officials.

The upcoming 2016 presidential elections could greatly impact the progress being made in Cuba. Several presidential hopefuls have made their sentiments toward the embargo known: Republican candidate Marco Rubio staunchly for the embargo, and Democratic candidate Hillary Clinton ardently against it. However, Mr. Quinter posited, “What has happened to date is legally reversible, but realistically not.” He believes the embargo will eventually meet its end: “As more investment in and trade with and authorized travel by Americans occur to Cuba, even the few people who support the U.S. embargo (Cubans call it a ‘blockade’) will realize the embargo is counterproductive, and a leftover from the Cold War of the 1950’s and 1960’s.”

At the moment, Mr. Quinter acknowledges that in the short term, OFAC regulations continue to make it difficult to do business in Cuba. However, he is hopeful for the future: “In 10 years, we will look back and wonder why the U.S. did not terminate the U.S. embargo of Cuba decades ago, and we will recognize the leadership of President Obama in having the courage and vision to starting the process.” In fact, President Obama has recently announced that he will be the first sitting U.S. president to visit Cuba in over the 85 years. This is a signal of the U.S.’s overall sentiment toward Cuba, but only time will tell how U.S.-Cuban relations are progressing.

Article By Nicole Cudiamat Minnis of The National Law Review / The National Law Forum LLC

Copyright ©2016 National Law Forum, LLC

 

1 Mr. Quinter was a part of a panel at the Legal Executives Institute 23rd Annual Marketing Partner Forum, held January 20-22nd in Orlando. He was joined by Eddy Arriola, Chairman of the Board & Chief Executive Officer, Apollo Bank for the presentation, “From Swords to Plowshares: Cuba, Legal Business Development and Industrial (R)evolution (Breakout)”.

Building a Business Development Mindset in Law Firm Associates, Junior and Income Partners

meeting handshake black figures

Firms continually struggle to transition associates and junior partners from the “learning to be a great attorney mindset” to being great attorneys who also actively contribute to the firm’s bottom line.  In a fragile and shrinking legal market, business development at all levels and in all practice areas starts earlier and is being monitored more closely. Common stumbling blocks at the outset of building a business development mindset include where attorneys should start and how firms should help attorneys tailor their plans to both their different practices and diverse personalities. Once those business development plans are in place, firms are further challenged by how they can monitor and measure the effectiveness of their plans and how they must balance competing requests for funding for Business Development activities.

I had the opportunity to interview three law firm leaders in diverse practice groups about developing and monitoring attorneys’ business development plans.  Jason P. Grunfeld, the Head of Business Development and a partner in the firm’s Financial Services group at Kleinberg, Kaplan, Wolff & Cohen, P.C.;   Louis Britt, the Regional Managing Partner for FordHarrison‘s Memphis, Nashville and Dallas offices and a Partner in the firm’s Employment Litigation group; and Samir Gandhi, co-practice leader of Sidley Austin’s New York Corporate Group, took the time to answer some questions about effective business development strategies.  Thank you to for Messrs. Britt, Gandhi, and Grunfeld for sharing their experiences.

Jennifer:  What are some practical tips for helping even the most junior associates build a business development mindset?

Jason:  I tell associates to ask themselves some big questions:

  • What part of my work/profession excites me?
  • What is my network (professional, social, school), and how can I keep actively intouch with them?
  • What are my priorities and where do I want to be in 2, 5, or 10 years?

Then I encourage them to draft a plan for developing their: skills; expertise; visibility within the profession and to potential clients; and expand their network (both internally and externally). To keep up the momentum, I ask them to pick two items they can complete within the next month. One goal might be to reconnect with a potential or current client by sending them an email to touch base. Another could be to research an organization they would like to become more involved in. Still another could be to think about a potential article topic in their area of practice.

I also remind them to look for everyday opportunities to connect with new contacts and reestablish old ones.  This kind of networking is essential no matter what stage of your career you are in. It’s not just about connecting with potential clients, it also gets you in front of referral sources, mentors/advocates, and ultimately a great support system.

Louis:  At FordHarrison, we encourage associates from the very beginning to build a business development mindset.  This starts with building good habits and getting out to meet people.  We insist that associates take part in an organization, whether it’s a bar association, an industry association, philanthropic, or civic-oriented.  We want them to work toward becoming a leader in that organization, which can start with committee involvement and build from there.  We want them to write for publications, participate in speaking opportunities, and get used to occasionally having lunch outside the office.  They can start with former classmates, but also take the opportunity to buy a client lunch whenever they have the opportunity in working with them.

Building good habits is akin to regular exercise.  No one can run a marathon without putting in lots of shorter runs on a daily basis.  Lastly, it’s always good when partners can take associates along on a business development activity, whether it’s as simple as a lunch or as big as a pitch meeting.  People learn best from examples, and this is a great way to take a little of the mystery and nervousness out of business development for associates.

Samir:  Use simple, easy to accomplish tasks.  Most junior associates/partners who are new to practice development get intimidated by the concepts of “business plans” or marketing strategies.  Create goals that are effective yet not overwhelming, like doing one client alert per month or three practice development phone calls per week.  These are less intimidating and more likely to be done and each sets a goal that is practice development-focused.

Jennifer:  How can business development plans be tailored to meet different types of practices, different personality types?

Jason:  For most lawyers, the two primary obstacles to business development are fear and lack of time. The fear comes when lawyers are asked to step outside of their comfort zones and engage in new activities. Lack of time causes lawyers to push business development to the back burner, never giving it the chance to mature into a habit.

As far as personalities go, we also know that lawyers score high on skepticism (they question everything), autonomy (they don’t like being managed), and urgency (they want immediate results). None of this is great for developing business.  At Kleinberg Kaplan we try to overcome these obstacles by helping our lawyers develop marketing plans and tactics that fit their practices and unique personalities.

Tactics such as writing articles and participating in webinars to demonstrate thought leadership are helpful for lawyers whose personalities are more introverted.  Speaking to groups and attending networking functions are suggested for lawyers who are more comfortable with being extroverted. Some also find success with small group interaction at settings such as restaurants, cultural events, or sporting events. Other tactics can include making lawyers available for interviews to comment on key issues related to their area of practice. It’s all about the comfort zone for the individual lawyer… there is no “one size fits all.” Lawyers whose business development efforts are consistent with the needs of their practice, as well as their personality, values, and interpersonal characteristics are more likely to perform better.

Samir:  Difficult to answer as it really depends on the practice, but I tell people to really listen to what their clients or prospective clients want.  Lawyers tend to do things that are formulaic rather than bespoke.  Listen to what your clients’ needs are and your business plan can revolve around that need.

Jennifer:  Once business development activities have taken place, how do you monitor follow up and follow through?

Jason:  One aspect of our coaching program is the development of systems to organize, motivate and direct our lawyers’ business development activities in the shortest amount of time. We are helping our lawyers to build their own specific list of prospects that they would like to transform into clients – and a system that tracks exactly where they are in the process and the next steps that need to be taken.  This analytical approach provides organization, prompts action, tracks conversations, and helps us to analyze networks. The process begins with a chart that includes the name of the target organization; the potential contact within the organization; general description/information about the organization, history and notes about the contact; next steps to be taken; and deadlines to be met.

An important part of the process is identifying the various stages of the relationship:

  1. target identified,

  2. when the initial communication is made,

  3. what steps are taken to build the relationship,

  4. when the meeting is held to assess legal needs,

  5. what steps are taken to build trust (follow-up, sending articles, sharing information, etc),

  6. when the agreement is made to hire, and

  7. when the file is opened.

Samir:  At Sidley we try to gauge follow up through surveys and results inquiries (e.g., how did the RFP go?).   As a practice group head, I try to make sure I remind lawyers on my team to continually follow up and keep your promises to do so.

Jennifer:  How do you balance competing requests for funds / priorities for business development activities?

Louis: As attorneys are seeking approval for funds outside of routine client lunches or dinners, we ask them what business purpose is served and what follow-up is planned.  Another thing we do at our firm is give a greater priority when a lawyer looks to involve others in his or her office.  We want to avoid the use of funds for “pet projects,” so to avoid this, we will often insist that certain activities involve more attorneys within the office, and require a plan for follow-up.

Samir:  Carefully.  Based on a combination of need and effective use of funds.  We are a large firm and there are a lot of competing teams looking for funds.  We try to make sure teams use best practices to be efficient so that we aren’t unable to fund someone who is deserving because we were inefficient with funds.

Article By  Jennifer Schaller of The National Law Review / The National Law Forum LLC
Copyright ©2016 National Law Forum, LLC

[1] I recently had the opportunity to hear Louis Britt III, Samir A. Gandhi, and Jason P. Grunfeld speak at Thomson Reuters 23rd Annual Marketing Partner Forum held last month in Orlando.  I’d also like to extend a big thank you to Cindy Larson, the Publisher of SuperLawyers Magazine who moderated the “Where Are You Going? Where Have You Been? Investing in Junior & Income Partners for Business Development” panel whose members included Messrs. Britt, Gandhi, and Grunfeld.  Click here: for a full recap of this panel discussion by Cindy.

Can USCIS Raise EB-5 investment Amount Without Congressional Intervention?

The July 2015 Visa Bulletin Brings Little ChangeSince its inception as part of the Immigration Act of 1990, the EB-5 program has had a $1,000,000 threshold capital investment requirement, with that minimum decreased to $500,000 for projects in targeted employment areas. Last year, legislation was introduced and circulated on Capitol Hill that would raise this investment amount in varying proposals and conditions.

Some have argued that raising the amounts is necessary given inflation: $1 million in 1990 has the same buying power as $1,813,443 in 2015. Others argue the investment amounts should remain at their present level to compete with other countries’ investment programs and maximize EB-5 visa usage –which has been quite low for most of the program’s history, spiking to fulfill the ~10,000 annual quota allocation only relatively recently.

Suppose, though, that USCIS wanted to change the investment amount without waiting for Congress to agree on a new bill. Could it do so?

The answer is clearly yes, and there are several ways of so doing. INA § 203(b)(5)(C) provides:

Amount of capital required.–

(i) In general.–Except as otherwise provided in this subparagraph, the amount of capital required […] shall be $1,000,000. The Attorney General, in consultation with the Secretary of Labor and the Secretary of State, may from time to time prescribe regulations increasing the dollar amount specified under the previous sentence.

(ii) Adjustment for targeted employment areas.–The Attorney General may, in the case of investment made in a targeted employment area, specify an amount of capital required […] that is less than (but not less than 1/2 of) the amount specified in clause (i).

(iii) Adjustment for high employment areas.–In the case of an investment made in a part of a metropolitan statistical area that at the time of the investment–

(I) is not a targeted employment area, and

(II) is an area with an unemployment rate significantly below the national average unemployment rate, the Attorney General may specify an amount of capital required under […] that is greater than (but not greater than 3 times) the amount specified in clause (i).

The statute, written in 1990, utilizes the antiquated term “Attorney General;” however, immigration regulatory functions now fall under the purview of the Secretary of the Department of Homeland Security following the dissolution of the INS. Nevertheless, it is clear that Congress has delegated the power to increase the minimum investment amounts in several ways that would not require a statutory amendment:

  1. USCIS, in conjunction with Labor and State, could increase the default $1,000,000 capital amount. Since $500,000 would be less than the increase, the TEA minimum would also need to be increased;

  2. USCIS could change the TEA amount, provided that it remains at least 1/2 of the non-TEA investment amount; and/or

  3. USCIS could increase the investment amount to $3,000,000 presently for projects which are:

a. In metropolitan statistical areas;
b. Not in TEAs;
c. Have unemployment rates which are “significantly below” the national average.

It is worth noting that Form I-526 already takes into consideration investments made in such “upward employment areas” even though they do not presently exist – see Part 2.b.

It is difficult to predict the likelihood of any of these events occurring. Any increase would likely create significant market disruption unless adequately anticipated and planned. Stakeholders would also need to understand and have input on the terms of grandfathering for pending filings, securities offerings, and initial investments so that the transition does not shutter the program.

Finally, it is worth noting that while Congress has delegated the ability to raise the EB-5 investment amount to DHS (through consultation with other agencies were required), its ability to do so is tempered somewhat. The Supreme Court’s Chevron test requires that regulations be “permissible construction(s)” of the statute. Could USCIS legally raise the minimum investment amount to $10,000,000 overnight, or change the TEA minimum investment so that it is only $1.00 less than the base amount? Potentially, but such actions would likely draw a federal court challenge to the limits of USCIS authority on the matter given the underlying legislative intent of the EB-5 program.

Article By Matthew T. Galati of Greenberg Traurig, LLP

©2016 Greenberg Traurig, LLP. All rights reserved.

Sick Leave and Minimum Wage Update: Oregon, Vermont, Santa Monica

On Wednesday, Oregon Governor Kate Brown signed into law legislation that increases that state’s minimum wage from $9.25 to up to $14.75 by 2022, the highest of any state.  The first increases go into effect on July 1, 2016.  Under SB 1532 [PDF], minimum wage rates vary based upon the employer’s location, as set forth in the table below.  Beginning in 2023, the rate will be indexed to inflation.  The Commissioner of the Bureau of Labor and Industries has been charged with adopting rules for determining an employer’s location.

Oregon, Vermont, Santa Monica

In addition, Santa Monica, California quietly passed a law raising the minimum wage and mandating paid sick leave starting July 1, 2016, adding to the regulatory maze for employers with employees in California.  As currently written, Santa Monica’s sick leave law tracks San Francisco’s (arguably the most generous sick leave law in the nation), in that it does not contain an annual accrual or use cap.  Instead, employees are allowed to accrue paid sick leave at the rate of one hour for every 30 hours worked, up to 40 hours (if the employer has 1-25 employees in Santa Monica) or 72 hours (if the employer has 26 or more employees in Santa Monica).  If the employee reaches that cap, then uses some sick leave, the employee begins accruing leave again, up to that cap.  In addition, employees are entitled to roll over all accrued, unused sick leave to the next year. As with the San Francisco ordinance, this creates difficulties for employers who wish to front-load a predetermined amount of sick leave (a practice that is permissible under California and many other sick leave laws).  Of note, the City has established a working group to review and recommend technical adjustments to the adopted ordinance.  The sick leave law goes into effect on July 1, 2016.

The Santa Monica law also establishes a minimum wage for employees who work at least two hours per week in Santa Monica.  Large employers—those with 26 or more employees in Santa Monica—must pay a minimum wage of $10.50/hour beginning on July 1, 2016, increasing annually to $15.00/hour on July 1, 2020.   Small employers—those with 25 or fewer employees in Santa Monica—must pay a minimum wage of $10.50/hour beginning on July 1, 2017, increasing annually $15.00/hour on July 1, 2021. Beginning July 1, 2022, and each year thereafter, the minimum wage will increase based on Consumer Price Index (CPI).   The working group is also reviewing the minimum wage portion of the law.

Finally, Vermont is on the verge of becoming the fifth state (following California, Connecticut, Massachusetts and Oregon) to require private employers to provide paid sick leave for employees.  All that is left is for Governor Shumlin to sign the legislation [PDF], which he is expected to do.  Vermont’s sick leave law differs somewhat from laws in other jurisdictions in that 1) it only requires paid sick leave for employees who work an average of at least 18 hours/week, 2) employees accrue sick leave at a rate of one hour for every 52 worked (one hour for every 30 worked is the most common rate of accrual) and 3) it allows employees to use leave to accompany a parent, grandparent, spouse or parent-in-law to long-term care related appointments.

In addition, the law has a stepped approach for implementation.  First, for small employers (those with 5 or fewer employees) the law does not go into effect until January 1, 2018; the effective date for all other employers is January 1, 2017.  Second, through December 31, 2018, employees may only accrue and use up to 24 hours of paid sick leave per year; beginning January 1, 2019, that amount increases to 40 hours per year.

Article By Shennan Harris of Squire Patton Boggs (US) LLP

© Copyright 2016 Squire Patton Boggs (US) LLP

The Day of North Korea Sanctions: the UN Imposes the Toughest North Korea Sanctions Yet While OFAC and State Designate More North Korean Entities

After weeks of negotiations and a Putin-backed delay, the UN Security Council unanimously adopted resolution 2270 on March 2, 2016, imposing new sanctions against North Korea. According to U.S. Secretary of State John Kerry, the resolution imposes the strongest set of UN sanctions in over two decades. This article provides a summary of the new UN North Korea sanctions followed by an overview of the most recent developments in North Korea sanctions under US law.

New UN North Korea Sanctions

The new sanctions require:

  • An asset freeze on all funds and other economic resources owned or controlled by the North Korean government or the Worker’s Party of Korea, if associated with its nuclear or ballistic missile program or other prohibited activities
  • A ban on the opening and operation of North Korean banks abroad
  • A ban on foreign financial institutions opening new offices in North Korea under all circumstances, unless first approved by the Sanctions Committee, and a requirement for UN Member States to order the closing of existing branches if there is credible information indicating the associated financial services are contributing to North Korea’s illicit activities
  • Designation of 16 new individuals and 12 entities (including North Korea’s Ministry of Atomic Energy and the Reconnaissance Energy Bureau)
  • A ban all public and private financial trade support to North Korea if there are reasonable grounds to believe there is a link to proliferation
  • Sectoral sanctions on North Korean trade in natural resources banning the export of all gold, titanium ore, vanadium ore and rare earth metals and banning the supply of all types of aviation fuel, including rocket fuel
  • A ban on the export of coal, iron, and iron ore used for North Korea’s nuclear or ballistic missile programs
  • Inspection of all cargo going to and from North Korea, not just those suspected of containing prohibited items
  • Expanding the arms embargo to include small arms and light weapons
  • A ban leasing or chartering vessels or airplanes, providing crew services to North Korea, and registering vessels
  • Expanding the list of luxury goods (prohibited for export to North Korea) to include luxury watches, aquatic recreational vehicles, snowmobiles worth more than $2,000, lead crystal items and recreational sports equipment
  • A sweeping ban on the transfer of any item if a UN Member State has reason to believe the item can contribute to the development and capabilities of the North Korean armed forces, except for food and medicine

China, a permanent member of the Security Council, joined the unanimous vote despite prior reluctance to strengthen UN sanctions against North Korea. It remains yet to be seen how China will enforce the sanctions.

U.S. North Korea Sanctions

Separately, the United States took action earlier against North Korea. We speculate that this action helped align the UNSC members toward the unanimous vote on UNSCR 2270. On February 18, 2016, President Barack Obama signed into law the North Korea Sanctions and Policy Enhancement Act of 2016. The bill had easily passed through both Houses of Congress on the heels of the most recent nuclear test and rocket launch by North Korea.

Then on March 2, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) named two entities and 10 individuals to its list of Specially Designated Nationals and Blocked Persons. On the same day, the State Department designated three entities and two individuals for activities related to weapons of mass destruction (WMD).

Over the next few months, OFAC is expected to issue new North Korea regulations to implement other provisions of the new statute.

The Act

The new statute provides for both mandatory and discretionary designations. These sanctions are directed at activities by U.S. Persons, which includes any United States citizen, permanent resident alien, any entity organized under the laws of the United States or any jurisdiction within the United States (foreign branches of U.S. companies, that means you too), and any person in the United States.

In addition, any transaction by any non-U.S. persons supporting any of the designated entities or prohibited activities must be carefully scrutinized, especially if the transactions involve the U.S. financial system in any way.

Mandatory Designations

The Act requires the designation and freezing of all assets subject to U.S. jurisdiction of any person that engages in any of the following activities relating to North Korea:

  • Nuclear and ballistic missile proliferation
  • Dealings in North Korean metals and products tied to WMD activities, the Korean Workers’ Party, armed forces, intelligence, or the operation of political prison camps
  • “Significant financial transactions” related to weapons of mass destruction
  • Undermining cybersecurity
  • Internal repression
  • Forced labor
  • Censorship
  • Human rights violations

In addition, the Act requires the President to decide on the designation of North Korea as a Primary Money Laundering Concern in the coming months.

As a result, companies must ensure that no company activity supports the activities of entities designated under the above act provisions. Compliance programs, including those related to anti-money laundering, should be reevaluated as the sanctions are not simple reiterations of previous measures. These mandatory designations will make it all the more necessary that companies maintain reasonable and proportionate due diligence and screening procedures to prevent facilitating the enumerated activities.

Discretionary Designations

Before we reach the current regulation regime, we will leave you with the remaining provisions of the Act that have not yet been implemented. While no one holds the OFAC crystal ball, these provisions may rear their head and are worth considering in advance of promulgation.

1. Blocking sanctions

The Act explicitly codified the blocking of assets of the Government of North Korea, the Workers’ Party of Korea, and North Korean Specially Designated Nationals (SDNs). While this sanction is essentially already in effect under the various executive orders, the explicit restrictions would prohibit the use of the U.S. financial system in connection with any transaction with the Government of North Korea, the Workers’ Party of Korea, or SDNs of North Korea.

2. UN Security Council resolutions

The Act also authorizes designation as an SDN of any person who supports a person designated pursuant to an applicable UN Security Council resolution. The potential implications of this Act provision deserve attention as the recent resolution imposed the toughest set of sanctions yet.

3. Bribery

If you thought the FCPA was the sole concern out of U.S. soil relating to bribery of foreign officials, think again. The Act also authorizes designation of any person who knowingly contributes to bribery of a North Korean official, or to misappropriation, theft, or embezzlement of public funds by, or for the benefit of, a North Korean official.

4. Sanctions grab bag

The Act also authorizes the President to prohibit any person already designated under the above three categories from transactions in foreign exchange or credit or payments subject to U.S. jurisdiction, procurement, and/or travel by the designated person’s officers and shareholders.

Refresher: Pre-Existing OFAC Regulations

The new Act builds upon the pre-existing U.S. sanctions against North Korea. For further background, see Trading Up: Newly Implemented North Korea and Libya Sanctions.

Blocking sanctions

The regulations provide for the continued the blocking of property and interests in property of certain persons with respect to North Korea that had been blocked pursuant to the Trading with the Enemy Act (TWEA) as of June 2000.Further, the regulations block property and interests in property of persons listed in the Annex to E.O. 13551 and of individuals and entities determined by Treasury in consultation with the State Department to have engaged in activities related to:

  • The import, export, or reexport of arms or related materiel from North Korea

  • The import, export, or reexport of luxury goods to North Korea

  • Money laundering, counterfeiting of goods or currency, bulk cash smuggling, narcotics trafficking, or other illicit economic activity supporting the Government of North Korea or its senior officials

  • Providing support for or goods or services of any of the above-listed activities or any person whose property and interests in property are blocked pursuant to E.O. 13551

  • Owning, controlling, or acting on behalf of any person whose property and interests in property are blocked pursuant to E.O. 13551

Vessels

The regulations prohibit U.S. persons from registering, owning, leasing, operating, insuring or otherwise providing support to North Korean vessels.

Imports to North Korea

Lastly in terms of prohibitions, the regulations prohibit imports of goods, services, and technology (including those used as components of finished products of, or substantially transformed in, a third country) from North Korea without an OFAC licenses or applicable exemption.

Authorizations

The preexisting regulations also provided authorization for the provision of certain legal services, emergency medical services, and entries in certain accounts for normal service charges by U.S. financial institutions.

The Takeaway

Interactions with North Korea are an increasingly dangerous minefield of sanctions. The new North Korea sanctions add to an already restrictive program. As a result, we recommend additional review and specialized controls as the new sanctions reach new heights (or depths, depending your level of preparation).

Article By Lisa C. Mays, J. Scott Maberry & Reid Whitten of Sheppard, Mullin, Richter & Hampton LLP

Copyright © 2016, Sheppard Mullin Richter & Hampton LLP.

March 2016 – gTLD Sunrise Periods Now Open

As first reported in December 2013, the first new generic top-level domains (gTLDs, the group of letters after the “dot” in a domain name) have launched their “Sunrise” registration periods.

As of February 29, Sunrise periods are open for the following new gTLDs:

.HOTELES

.xn--xhq521b (.广东 – Chinese for “guangdong”)

.xn—1qqw23a

(.佛山 – Chinese for “foshan”)

.xn--tckwe

(.コム – Japanese for “.com”)

.barcelona

.mom

.xn—vuq861b (信息 –  for “knowledge”)

ICANN maintains an up-to-date list of all open Sunrise periods here.  This list also provides the closing date of the Sunrise period.  We will endeavor to provide information regarding new gTLD launches via this monthly newsletter, but please refer to the list on ICANN’s website for the most up-to-date information – as the list of approved/launched domains can change daily.

Because new gTLD options will be coming on the market over the next year, brand owners should review the list of new gTLDs (a full list can be found here) to identify those that are of interest.

Article By Monica Riva Talley, Tracy-Gene G. Durkin & Shana L. Olson of Sterne, Kessler, Goldstein & Fox P.L.L.C.

© 2016 Sterne Kessler

California DFEH Announces Guidance to Employers Regarding Transgender Rights in the Workplace

Individuals who identify as transgender are protected under California’s Fair Employment & Housing Act (Cal. Govt. Code §12940)(“FEHA”).  FEHA protection was extended in 2012 to include gender identity and gender expression categories, and defines “gender expression” to mean a “person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.”  Transgender worker rights have received increased attention in recent months as employers attempt to put into place compliant procedures that are sensitive to transgender workers.

On February 17, 2016, the California Department of Fair Employment and Housing (“DFEH”) issued guidelines on transgender rights in the workplace.  As this cutting edge area of law continues to develop, employers would be wise to follow the DFEH common sense recommendations which are summarized below:

Do Not Ask Discriminatory Questions

Finding the right employee can be a challenge for employers.   Interviews of prospective candidates can provide helpful insight as to whether the particular candidate is right for the position.  Employers may ask about an employee’s employment history, and may still ask for personal references and other non-discriminatory questions of prospective employees.  However, an employer should not ask questions designed to detect a person’s sexual orientation or gender identity.  The following questions have been identified by the DFEH as off-limits:

  • Do not ask about marital status, spouse’s name or relation of household members to one another; and

  • Do not ask questions about a person’s body or whether they plan to have surgery because the information is generally prohibited by the Health Insurance Portability and Accountability Act (HIPAA).

Apply Dress Codes and Grooming Standards Equally

The DFEH reminds employers that California law explicitly prohibits an employer from denying an employee the right to dress in a manner suitable for that employee’s gender identity.  Any employer who requires a dress code must enforce it in a non-discriminatory manner.  For example, a transgender man must be allowed to dress in the same manner as a non-transgender man.  Additionally, transgender persons should be treated equally as are non-transgender persons.

Employee Locker Rooms/Restrooms

According to the DFEH, employees in California have the right to use a restroom or locker room that corresponds to the employee’s gender identity, regardless of the employee’s assigned sex at birth.  Where possible, employers should provide an easily accessible unisex single stall bathroom for use by any employee who desires increased privacy.  This can be used by a transgender employee or a non-transgender employee who does not want to share a restroom or locker room with a transgender co-worker.

Summary

It is important to note that FEHA protects transgender employees and those employees who may not be transgender, but may not comport with traditional or stereotypical gender roles.

The DFEH’s guidance reminds California employers that a transgender person does not need to have sex reassignment surgery, or complete any particular step in a gender transition to be protected by the law.  An employer may not condition its treatment or accommodation of a transitioning employee on completion of a particular step in the transition.

Ultimately, while not the binding authority, the DFEH’s message is clear—employers should avoid discriminatory conduct, apply procedures consistently, and follow transgender employee’s lead with respect to their gender identity and expression.  The DFEH guidelines are consistent with the Equal Employment Opportunity Commission’s interpretation that Title VII prohibits discrimination based on sexual orientation and gender identity.

Article By Anne Cherry Barnett of Polsinelli PC

© Polsinelli PC, Polsinelli LLP in California

A Twisting Path: Illinois Licensure Actions Against Physicians, Nursing Home Administrators, Nurses, and Other Professionals

The Illinois Department of Financial & Professional Regulation (the Department), Division of Professional Regulation (the Division), regulates the licenses of numerous professionals in the health care fields, including physicians, nurses, nursing home administrators, and many others. For health care professionals facing an investigation, hearing, or potential disciplinary action related to alleged misconduct, the Division’s process can seem quite daunting and confusing. The information provided below, along with the advice of experienced legal counsel, can help you navigate this twisting path.

Notifications and Investigations

Most disciplinary actions are for the overly broad and subjective reason of “unethical or unprofessional conduct.” Individuals can come to the Division’s attention through complaints by dissatisfied patients, co-workers, or supervisors, or by referrals from other regulatory bodies such as the Illinois Department of Public Health (IDPH) or the Illinois Department of Healthcare and Family Services (IDHFS).

Although logic and efficiency dictate that the Division investigate any complaints it receives before alleging the licensed professional might have violated applicable regulations, that is not always the case. More often than not, the “investigation” begins with the filing of a notice to the licensee that the Division received a complaint, and the notice includes a request that the licensee appear at an informal conference. The Division sends such notices to the licensee’s home, as that is the address the Division has on file. Occasionally, licensees will be visited by an investigator at the place of business; this is usually done only when the state budget allows for such expenditures.

If this happens, then do not panic. For reasons detailed below, with the help of experienced counsel, many informal conferences result in the Division concluding that the licensee did nothing wrong.

There are numerous occasions when reporting to the Division is mandatory. For example, IDPH must report the names and license numbers of nursing home administrators when it cites certain deficiencies in a nursing home. Nurses who are administrators or officers of a health facility must report a nurse impaired by drugs or alcohol or who possesses, uses, or distributes drugs. IDHFS reports when physicians enter into integrity agreements or opt out of the Medical Assistance Program. If a health care licensee is accused of a sex crime, the prosecutor notifies the Division and the practitioner can only practice with a chaperone.

Disciplinary Conferences and Hearings

If the Division schedules an informal disciplinary conference, the licensee should consider hiring a lawyer. If the Division does not schedule an informal conference, then the licensee should ask the Division to do so. These conferences are typically handled by a Division attorney and a member of the relevant licensing board (the latter of whom usually takes the lead in asking questions and making the final decisions).

Informal disciplinary conferences generally take the place of an investigation and offer an excellent opportunity for the licensee to tell his or her side of the story. The board members who attend these conferences are typically in the same profession as the licensee (although not necessarily from the same kind of work environment), so they understand the practices, processes, and pressures facing the individuals who appear before them. The vast majority of such conferences end with a recommendation that no further action be taken.

A hearing is a far more formal process, conducted by an administrative law judge (ALJ) with a court reporter present and, generally, conducted according the rules of evidence. Again, the licensee can and should be represented by counsel. One or more members of the relevant board may be present and may participate by questioning witnesses. The ALJ prepares a report that is then reviewed by a committee of board members before it goes to the director of the Department for a final order.

Disciplinary Actions

Activities that generate disciplinary actions include sister-state discipline, drug/alcohol issues, failures related to treatment, and bureaucratic issues. In looking at recent disciplinary actions reported over a seven-month period on the Division’s website, physicians were disciplined for sister-state discipline 58 times, for drug/alcohol transgressions 20 times, treatment problems 50 times and bureaucratic issues 40 times. Nurses were disciplined for sister-state discipline 92 times, drug/alcohol transgressions 88 times, treatment problems 21 times and bureaucratic issues 46 times. Only one nursing home administrator — one on a temporary license, at that — was disciplined for failure to report abuse in a timely manner.

Disciplinary actions can include reprimand, additional continuing education hours, inservices, probation (for a defined or indefinite period), restrictions, quality assurance audits, fines, suspension, refusal to renew, placement in permanent inactive status, or termination. The Division may also place a letter in a licensee’s file, but the letter is not considered discipline — as such, these letters do not appear on the Division’s website. These letters essentially tell the licensee to avoid doing whatever brought them to the attention of the Division in the first place. The Division can use such letters as a basis for progressive discipline if the licensee comes to the Division’s attention for a similar reason in the future.

Disciplinary actions in one state affect licensure status in other states. They also may affect a licensee’s ability to participate in the Medicaid and Medicare programs and to prescribe controlled substances. Even an investigation that does not result in a penalty must on some occasions be reported, and failure to do so may result in further disciplinary action.

Protect Your Privileges!

Remember, holding a professional license is a privilege, not a right. Such a privilege is always subject to strict scrutiny and can be restricted as necessary to assure that the public are not harmed in any way. Needless to say, seeking out knowledgeable counsel is always recommended.

Article By Frances D. Meehan of Much Shelist, P.C.

© 2016 Much Shelist, P.C.

Trump Trump Trump Trump Trump Trump Everywhere All the Time, Including in Workplace

Ddonald trum larry kingonald Trump has become part of the national conversation. Not a single day goes by now without Mr. Trump filling up at least one news cycle.  His recent success reminds me of a fantastic exchange in Private Parts when a researcher is explaining Howard Stern’s improbable success to the infamous Pi … let’s just call him Phil Vomitz:

Researcher: The average radio listener listens for eighteen minutes. The average Howard Stern fan listens for – are you ready for this? – an hour and twenty minutes.

Phil Vomitz: How can that be?

Researcher: Answer most commonly given? “I want to see what he’ll say next.”

Phil Vomitz: Okay, fine. But what about the people who hate Stern?

Researcher: Good point. The average Stern hater listens for two and a half hours a day.

Phil Vomitz: But… if they hate him, why do they listen?

Researcher: Most common answer? “I want to see what he’ll say next.”

Not surprisingly, not a single day also goes by without a workplace water-cooler (or better yet, chat room) conversation about Mr. Trump (or any of the other presidential candidates.) It can run the spectrum from some friendly banter among co-workers, to a serious dialogue about the issues facing this country, all the way to a heated disagreement coupled with threats of violence.  And it begs the question: how can employers respond to employee political speech in the workplace?  This post addresses that issue.

Few Laws Exist Protecting Employee Political Speech in Private Workplaces

Generally private employers can take adverse actions against employees based on their political speech, unless (i) the employer operates in a state or city that specifically protects employees against discrimination because of political speech, or (ii) the employees are subject to a collective bargaining agreement that does the same.  (The story is quite different for public sector workers, but we do not address them here.)

Many workers live in jurisdictions that provide at least some protection against political speech discrimination – typically in the form of protecting an employee’s political activities, expressions and/or affiliations.  But those laws come in all shapes and sizes, so employers must proceed carefully before banning political speech or disciplining an employee.  For example, Washington D.C.’s human rights law limits its reach to actual or perceived political affiliations only, while Seattle’s law is a bit broader, extending to one’s “political ideology.”  Wisconsin protects those declining to attend a meeting or to participate in any communication about political matters.

More often than not, these laws protect workers from discrimination because of their political activities outside instead of inside the workplace.  For example, with limited exceptions, Colorado law prohibits employers from firing someone because of their lawful off-duty activities, which includes engaging in political speech, and it also prohibits employers from making any rule prohibiting employees from engaging or participating in politics or running for office.  New York’s law protects employees engaging in certain “political activities” outside the workplace, during off hours, but it contains an exception where the employee’s activities would create a “material conflict of interest related to the employer’s trade secrets, proprietary information or other proprietary or business interest.”

There is no federal law that specifically protects employees from discrimination or retaliation because of their political activities, affiliations or expressions.  And the First Amendment is not much of a help as it only protects a person’s right to free speech from government interference, not from interference by private employers.

Therefore, unless you live in a jurisdiction that protects you, if the boss overhears you in the cafeteria campaigning for Team Trump or going haywire for Hillary, he or she can generally send you packing.

Political Speech May Invoke the Protections of Other Laws, However

Of course, it’s a bit more complicated than the above analysis indicates, and will only become more so as the primary, and then general election, season unfolds.  To explain, consider the following hypothetical.

Employees A and B are talking in the break room about the upcoming Democratic debate.  Employee A says to Employee B that Hillary is the only candidate who can deliver on increasing the minimum wage, and “maybe they’ll stop underpaying us here if that happens.”  Employee B disagrees emphatically, placing his bet on Bernie Sanders as the only viable candidate to get the job done, and eventually the conversation turns uncomfortably vocal such that Employee C, an older Hispanic woman, cannot help but overhear Employee B comment to Employee A that he fully expects Hillary Clinton to play the female victim card to stave off criticism about her e-mail scandal.  Employee D, who supervises Employees A, B and C, chimes in and enthusiastically sides with Employee B stating that women always do this, and that Employee A should really stop griping about her wages if “she knew what was good for her.”  Employee E, a senior executive, then gets in on the conversation by professing his love for Trump, including by echoing his views on immigration and in particular, Mexican immigrants, and then he goes on to say that he thinks Hillary is just too old to assume the Commander in Chief Position.  Meanwhile Employees F, G, and H are sitting there stunned with their turkey sandwiches in hand, saying to themselves “awwwwwkward!”

This hypothetical, drawn directly from The Cat in the Hat Comes Back: Workplace Edition, shows that while the employer doesn’t necessarily have a political speech problem on its hands, it may instead have sex, age, race and national origin discrimination and/or NLRA interference complaints coming its way – just from one spirited election-related conversation in the break room.  Yes, politically-related conversations often invoke passionate feelings on both sides of the aisle on issues ostensibly about public policy, but they also often touch on issues that may relate to someone’s membership in a protected class, leaving employers vulnerable to discrimination and other claims.

Potential Employer Responses to Political Speech in the Workplace

As we head into Super or SEC Tuesday and the (17-month+ long!) election season plods along, you should be asking yourself what level of political discourse do you want in your workplace.  Do you want everyone to keep their political opinions to themselves or do you want to encourage robust debate or somewhere in between?  Discussion of politics and campaigning in the workplace puts you on tricky terrain, and may lead to conflict among your employees and thus, wherever you fall on this spectrum, consider addressing these issues in your code of conduct or in your handbook, including more specifically in your anti-discrimination/harassment, complaint reporting, non-solicitation/distribution and social media and electronic use policies.  In doing so, remain mindful of certain laws like the state and local laws mentioned above and the National Labor Relations Act, which restrict your ability to limit certain politically-based conversations/activities in the workplace.

If you will tolerate political discussions in the workplace, consider whether it’s necessary during this election season to conduct workplace professionalism training seminars for all staff members to reduce the likelihood that a healthy debate will turn into a contentious or inappropriate one.  Or consider distributing an election-focused one-pager with helpful talking points.  For example, it may remind employees that a politically-laced, yet well-intentioned conversation, even between the best of friends, can quickly turn contentious, and thus, even though you are not banning such conversations, you are asking your employees to think twice before engaging in one.  Or if the employees do engage in such a conversation, they should be sensitive to others’ beliefs and should not pressure anyone into discussing politics at work.  It also should remind them to utilize your complaint reporting mechanisms if a problem does arise from such a conversation.

Overall, employers should aim for outcomes where employees can engage in a dialogue about important issues, whether in person or electronically, during non-working hours while remaining respectful of others’ points of view and aware of key discrimination and labor laws.  Employees should also understand that they may be subject to discipline for failing to meet your standards of conduct regarding political discourse.  Taking this approach should allow employers to create realistic workplace social conditions, maintain employee morale, and reduce their exposure to a lawsuit.

Article By Michael S. Arnold of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Copyright Suit Alleges Huckabee Campaign Lacks “Eye of the Tiger”

Mike Huckabee’s poor performance in the Iowa caucuses – leading to his subsequent withdrawal from the race – isn’t his only concern lately. Huckabee’s presidential campaign organization faces a lawsuit for playing Survivor’s “Eye of the Tiger” without permission during a rally for Kentucky County Clerk Kim Davis, who was released from jail for contempt of court stemming from her refusal to issue marriage certificates to same-sex couples in the wake of the Supreme Court’s landmark ruling. (See Rude Music, Inc. v. Huckabee for President, Inc., No. 15-10396 (N.D. Ill. filed Nov. 18, 2015)). The plaintiff, Rude Music, Inc., owned by Survivor’s guitarist Frank M. Sullivan III, and the publisher of the musical composition, filed a copyright infringement action against Huckabee for President, Inc. in November of 2015. According to the complaint, as Huckabee led Davis from the detention center, a clip from Survivor’s Grammy-winning song “Eye of the Tiger” was used for dramatic effect. Rude Music alleged that this public performance infringed its copyright, and is seeking an injunction barring future unauthorized performances and monetary damages.

Made famous in Rocky III and regularly blasted from stadium speakers to stoke up the home team and the crowd, “Eye of the Tiger” was a number one hit on the Billboard Hot 100 Chart for six weeks in 1982 and features a catchy melody with lyrics that inspire listeners to prepare for life’s battles. In the movie, the song plays over dramatic scenes of Rocky battling opponents in the boxing ring before his triumphant match against Clubber Lang. Not to be outdone, Huckabee’s rally for Mrs. Davis attempted to use these same themes to paint a virtuous battle between a defiant state court clerk versus the federal government.

Like trash talk at a pre-fight weigh-in, Sullivan was quick to respond to the rally on his Facebook page: “NO! We did not grant Kim Davis any rights to use ‘My Tune — The Eye Of The Tiger. I would not grant her the rights to use Charmin!”….” After the suit was filed, Mike Huckabee responded, calling the lawsuit “very vindictive” and renewed his support for Mrs. Davis’s position. Unsurprisingly, Sullivan expressed his opposing view and went on to state that he does not “like mixing rock and roll with politics; they do not go hand in hand.”

In his Answer to Rude Music’s complaint, Huckabee asserted several affirmative defenses to the infringement claim, including fair use (arguing that his alleged use of a one-minute clip of the song during a noncommercial and religious rally should constitute fair use). Interestingly, Huckabee also counterpuched that the rally for Kim Davis was not a campaign event at all, rather a religious assembly within the meaning of Section 110(3) of the Copyright Act. Certain provisions of the Copyright Act (17 U.S.C. § 110(3)) create an exemption to copyright requirements for the “performance of a nondramatic literary or musical work or of a dramatic-musical work of a religious nature, or display of a work, in the course of services at a place of worship or other religious assembly.”  Huckabee claims that because “Eye of the Tiger” isn’t incorporated or performed in musical theater, it is a nondramatic musical work for purposes of the Copyright Act. Therefore, because he considers the Davis rally to be a “religious assembly,” the alleged improper use of the song does not constitute infringement under the Copyright Act.

Apparently “Eye of the Tiger” is a popular tune along the campaign trail, as this isn’t the first time that Rude Music filed a lawsuit against a presidential candidate for using its song at a rally. Newt Gingrich was sued by Rude Music in 2012 after Rude Music claimed that Gingrich played “Eye of the Tiger” at events going back as far as 2009. In any case, Huckabee will still need to start “risin’ up to the challenge of [his] rival,” only now his opponent is an 80s rock star instead of other Republican hopefuls, since, as the Iowa Caucus results proved, Huckabee wasn’t a Survivor after all.

© 2016 Proskauer Rose LLP.