Category: Labor & Employment

Office Romances: 3-Part Series on How to Shield Your Company from Liability Part 1

GT Law

Love is in the air – which could bring claims of sexual harassment and discrimination.  As Valentine’s Day approaches, employers should be mindful of office romances:

  • Statistics show that more than 20% of married couples met at work, yet nearly half of those employees reported that they did not know if their company had a policy on office romances.
  • According to a recent survey by Monster Worldwide, 59% of employees admitted that they have been involved in an office romance.
  • An additional 64% answered that they would be willing to do so if the opportunity arose.
  • Yet, 75% of employers do not have a policy regarding workplace relationships.
  • AshleyMadison.com (a dating site for married people looking to cheat – yikes!) reports that 46% percent of men and 37% percent of women have had an affair with a co-worker. Among these cheaters, 72% percent of women and 59% percent of men say that they had their first encounter with the affair partner at a company holiday party … which means now is the time for employers to pay attention!

In this three-part series, learn (1) the potential risks to employers from workplace relationships, (2) how to draft an office romance policy, and (3) what steps to take to head off potential litigation.  Part I addresses the negative consequences that office romances can pose to unprepared employers.

What’s the Harm?

While consensual office relationships are more commonplace than in the past, they can trigger business and legal headaches for employers when the relationship fizzles or is no longer consensual.  Moreover, fellow employees may feel resentful, jealous, uncomfortable, or intimidated (especially in relationships between a supervisor and a subordinate), leading to complaints of sexual harassment, discrimination, or retaliation.

Importantly, claims may be brought not only by the individuals in the relationship, but even by third parties.  Complaints of “paramour favoritism” are on the rise and are being filed by employees who allege they are overlooked due to preferential treatment towards a co-worker who is engaged in a romantic relationship with the boss.  While courts differ on whether such claims are meritorious, turning a blind eye to such relationships may result in business interruption and liability.

In 2011, for example, the EEOC reported that 11,364 charges of sexual harassment were filed, and 16.3% of those were filed by men.  These charges are quite costly to employers – the EEOC recovered over $52 million in damages for sexual harassment claims in 2011.  Employers might not be able to prevent love in the office, but you can take action to mitigate potential liability.  An important initial measure is to draft a good policy depending on your company’s size, structure, business goals, and culture.  Make sure that, if you implement an office dating policy, you  enforce it uniformly and take appropriate and equal action for violations of the policy.

Watch for installments 2 and 3 to learn the dos and don’ts when drafting an office romance policy and tips for employers to avoid liability.

Article by:

Mona M. Stone

Of:

Greenberg Traurig, LLP

Philadelphia Enacts Pregnancy Accommodation Law

Morgan Lewis

 

An amendment to the city’s ordinance enhances protections for nondisabled employees affected by pregnancy or childbirth and imposes greater accommodation requirements on employers.

On January 20, Philadelphia Mayor Michael Nutter signed an amendment[1] to the city’s Fair Practices Ordinance (Chapter 9-1100 of The Philadelphia Code), expressly banning discrimination based upon pregnancy, childbirth, or a related medical condition and imposing new workplace accommodation requirements on Philadelphia employers. The amendment places Philadelphia among a growing number of jurisdictions that require employers to provide workplace accommodations to employees who are “affected by pregnancy,” regardless of whether those employees are “disabled.”

Impact of the Amendment

Unlike its federal and state counterparts—the Pregnancy Discrimination Act, the Americans with Disabilities Act, and the Pennsylvania Human Relations Act—Philadelphia’s amended ordinance actually compels employers to make reasonable workplace accommodations for female employees “affected by pregnancy”—i.e., women who are pregnant or have medical conditions relating to pregnancy or childbirth—regardless of whether those employees have been “disabled” by the pregnancy. The ordinance identifies a number of possible accommodations that may be required, including restroom breaks, periodic rest for those whose jobs require that they stand for long periods of time, special assistance with manual labor, leave for a period of disability arising from childbirth, reassignment to a vacant position, and job restructuring.

This new law imposes a significant burden on employers, requiring that they grant the requested accommodations unless doing so would impose undue hardship on the operation of the employers’ businesses. The factors to be considered in the undue hardship analysis include the following: (a) the nature and cost of the accommodations; (b) the overall financial resources of the employer’s facility or facilities involved in the provision of the reasonable accommodations, including the number of persons employed at such facility or facilities, the effect on expenses and resources, or the impact otherwise of such accommodations upon the operation of the employer; (c) the overall financial resources of the employer, including the size of the employer with respect to the number of its employees and the number, type, and location of its facilities; and (d) the type of operation or operations of the employer, including the composition, structure, and functions of the workforce, and the geographic separateness or administrative or fiscal relationship of the facility or facilities in question to the employer.

Perhaps the most significant aspect of the amendment is that it extends privileges to employees affected by pregnancy that are unavailable to other employees, including many disabled employees. For example, the law requires an employer to consider job reassignment and job restructuring for pregnant employees, even though these types of accommodations are generally not required for disabled employees under state or federal law. As such, employers with operations in Philadelphia (along with those in other jurisdictions that have recently passed heightened pregnancy accommodation laws like California,[2]Maryland,[3] New Jersey,[4] and New York City[5]) should revisit their existing reasonable accommodation policies to ensure that they are providing required accommodations for pregnant workers—even those who are healthy and not incapacitated by the pregnancy.

From a litigation perspective, the law specifies the affirmative defenses that will be available to employers facing claims under the amended ordinance. In addition to the undue-burden defense described above, an employer will have an affirmative defense if it can show that the employee “could not, with reasonable accommodations, satisfy the requisites of the job.” This language is important because it will allow employers to continue managing the performance of pregnant workers who, even with accommodation, simply cannot perform their jobs. Nonetheless, the impact of this affirmative defense remains to be seen given the amendment’s language suggesting that job restructuring and reassignment may be required accommodations.

Employees aggrieved by a violation of the amended ordinance are entitled to the same remedies that are available for other unlawful employment practices—including injunctive or other equitable relief, compensatory damages, punitive damages, and reasonable attorney fees. Additionally, certain factual scenarios, such as a failure to properly respond to a request for accommodations (e.g., lactation breaks or nursing an infant), may trigger a pregnancy accommodation cause of action, as well as causes of action under the Fair Labor Standards Act and/or Title VII.[6]

As mentioned above, the amendment places Philadelphia squarely in the middle of a significant legislative trend that has been gaining momentum. In the last 18 months, California, Maryland, New Jersey, and New York City have passed similar pregnancy accommodation laws. Several other jurisdictions are, or will soon be, considering comparable legislation. The West Virginia House of Representatives unanimously passed a similar bill on February 5, 2014, and Pennsylvania legislators announced in December 2013 that they will be introducing Pennsylvania’s Pregnant Workers Fairness Act in the near future. In addition, a federal version of the Pregnant Workers Fairness Act was introduced in the U.S. Senate in May 2013 but stalled in committee. Several other states—including Alaska, Connecticut, Hawaii, Illinois, Louisiana, Michigan, New Hampshire, and Texas—already require some type of pregnancy accommodation.

Notice Requirement

The new law requires that Philadelphia employers provide written notice—in a form and manner to be determined by the Philadelphia Commission on Human Relations—by April 20, 2014. The notice must be posted conspicuously in an area accessible to employees.

Moving Forward

For employers with operations in Philadelphia, the amendments to the Fair Practices Ordinance may signal that now is the time to revisit or revamp employee handbooks and train human resources and benefits employees on the new requirements in this area. Specifically, the amended ordinance will require most Philadelphia employers to overhaul their reasonable accommodation policies and train human resources professionals and managers regarding when the interactive process is triggered for employees affected by pregnancy, what steps must be followed to ensure effective engagement in that process, and when accommodations must be granted for such employees.

[1]. View the amendment here.

[2]. See our December 28, 2012 LawFlash, “New California Disability Regulations to Become Effective December 30,” available here.

[3]. See our July 1, 2013 LawFlash, “Maryland Enacts Three New Employment Laws,” available here.

[4]. See our January 10, 2014 LawFlash, “New Jersey Assembly Passes Pregnancy Discrimination Bill,” available here, and our January 27, 2014 LawFlash, “New Requirements for New Jersey Employers,” available here.

[5]. See our September 27, 2013 LawFlash, “New York City Offers Greater Protections for Pregnant Workers,” available here.

[6]. See our June 12, 2013 LawFlash, “New Developments Surrounding Lactation Discrimination,” available here.

Article by:

Sean P. Lynch

Of:

Morgan, Lewis & Bockius LLP

The Affordable Care Act—Countdown to Compliance for Employers, Week 47: The Reporting Conundrum

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The Affordable Care Act establishes three new, high-level, reporting requirements:

  • Code § 6051(a)(14)

Employers must report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement;

  • Code § 6055

Entities that offer minimum essential coverage (i.e., health insurance issuers, certain sponsors of self-insured plans, government agencies and other parties that provide health coverage) must report certain information about the coverage to the employee and the IRS; and

  • Code § 6056

Applicable large employers must provide detailed information relating to health insurance coverage that they offer.

The W-2 reporting rules have been in effect for a while, and I do not address them in this post. This post instead addresses Code §§ 6055 and 6056, which were originally slated to take effect in 2014, but which were subsequently delayed by one year in IRS Notice 2013-45.

The Treasury Department and IRS issued proposed regulations under both rules on September 30, 2012. (For an explanation of the proposed regulations, please see our October 21, 2013 client advisory. Although garnering far less attention than the Act’s pay-or-play rules, the rules under newly added Code §§ 6055 and 6056 should not be overlooked. Both provisions require a good deal of specific information about covered persons and the particular features of the group health plan coverage such persons are offered. Required reports must be furnished to both the government and covered individuals.

  • Under Code section 6055, plan sponsors must report to the IRS who is covered by the plans and the months in which they were covered. Plan sponsors must also provide this information to the employees who are enrolled in their plans along with additional contact information for the plan.
  • Under Code section 6056, applicable large employers must report to the IRS, and provide to affected full-time employees, information that includes:

(i) The employer’s contact information;

(ii) Whether the company offered minimum essential coverage to full-time employees and their dependents;

(iii) The months during which coverage was available;

(iv) The monthly cost to employees for the lowest self-only minimum essential coverage;

(v) The number of full-time employees during each month; and

(vi) Information about each full-time employee and the months they were covered under the plan.

Absent regulatory simplification, the costs of compiling, processing, and distributing the required reports will be substantial. But the regulators are in a difficult position, since they must remain true to the requirements of the law. The proposed regulations do offer some suggestions for simplification. For example:

  • Employers might be permitted to report coverage on IRS Form W-2, rather than requiring a separate return under Section 6055 and furnishing separate employee statements. But this approach could be used only for employees employed for the entire calendar year and only if the required contribution for the lowest-cost self-only coverage remains stable for the entire year.
  • The W-2 method could also be extended to apply in situations in which the required monthly employee contribution is below a specified threshold (e.g., 9.5% of the FPL) for a single individual, i.e. the individual cannot be eligible for the premium assistance tax credit.
  • Employers might be permitted to identify the number of full-time employees, but not report whether a particular employee offered coverage is full-time, if the employer certifies that all employees to whom it did not offer coverage during the calendar year were not full-time.

Industry comments filed in response to the proposed regulations have seized these suggestions to ask for further relief. Some commenters suggested replacing the reporting process with a certification process under which an employer could simply certify that it has made the requisite offer of coverage. Others have asked that information be provided to employees only on request, on the theory that not all employees will need to demonstrate that the employer either failed to offer coverage or that the coverage was either unaffordable or did not constitute minimum value.

While many of the comments submitted in response to the proposed regulations were both thoughtful and practical, many are also difficult to square with the terms of the statute. As a result, the most likely outcome is that the final rules under Code §§ 6055 and 6056 will look a lot like the proposed rules—which look a lot like the statute.

Article by:

Alden J. Bianchi

Of:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Supreme Court Affirms Contractually Reduced Limitations Periods for Employee Retirement Income Security Act (ERISA) Benefit Claims Date

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A contractual limitations period in an ERISA disability benefits plan that required participants to bring suit within three years after “proof of loss is due” is enforceable, theU.S. Supreme Court has ruled unanimously. Heimeshoff v. Hartford Life & Accident Ins. Co. et al., 134 S.Ct. 604, 187 L. Ed. 2d 529 (2013).

Whether and under what circumstances an otherwise applicable statute of limitations can be contractually shortened where a claim for benefits is made under a plan subject to the Employee Retirement Income Security Act of 1974 has divided the courts of appeals for years. A participant in an employee benefit plan covered by ERISA may bring a civil action under §502(a)(1)(B) to recover benefits. Courts have generally required participants to exhaust the plan’s administrative remedies before filing these suits. ERISA, however, does not specify a statute of limitations for filing such a suit.

Heimeshoff is significant for three reasons. First, implicit in the Court’s decision is the recognition that “reasonable” contractual limitations periods are generally enforceable for ERISA claims. According to the Court, “in the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitations, provided that the shorter period itself shall be a reasonable period” (quoting Order of United Commercial Travelers of America v. Wolfe, 331 U.S. 586, 608 (1947)).

Second, the decision also appears to assume, if not specifically hold, that contractual limitations periods for insured ERISA plans (at least where the limitations period is in the insurance policy) are subject to state laws that expressly prohibit contractual limitations periods shorter than a defined period (as opposed to state laws that merely set a default minimum statute of limitations that applies only in the absence of a contractual limitations period).

Finally, the decision overturns the law in certain circuits holding a contractual limitations period cannot begin to run until available administrative remedies have been exhausted. Heimeshoff should not have any application to claims of breach of fiduciary duty under ERISA; it is limited to ERISA benefits claim matters. It is certainly possible that the limitations Heimeshoff applies will have the effect of increasing ERISA fiduciary claims actions, although the federal courts are wary of benefits claim cases denominated as ERISA fiduciary breach matters.

The Court, referring to state insurance statutes, pointed out that “the vast majority of States require certain insurance policies to include 3-year limitations periods that run from the date proof of loss is due.” On the theory that federal law determines when an ERISA cause of action accrues, some circuits previously held the time for bringing the action does not begin to run until the administrative review process has been completed. In Heimeshoff, the Supreme Court held that such a hard and fast rule is inappropriate. Absent unreasonable limitations barring a participant’s ability to assert a claim, it said, the terms of the written plan are paramount and should be enforced. The new rule is more fact-specific. The contractual limitations period, including its commencement date as specified in the policy, should be enforced unless the claimant is left with an unreasonably short period to file suit after the administrative review process ends. The Court recognized that starting the limitations period at the point “proof of loss is due,” which necessarily is before the completion of the administrative review process, “will, in practice, shorten the contractual limitations period.” But the Court nevertheless held that such a requirement is enforceable, provided the claimant is left with a “reasonable” period of time to file suit.

The Court did not indicate what remaining period of time might be unreasonable. Because the plaintiff in Heimeshoff had about one year left to file a complaint following the completion of the review of her claim, 12 months presumably is not “too short” in the run of cases. Relying upon Heimeshoff, a federal District Court in New Jersey dismissed an ERISA benefits claim as untimely, finding a nine-month residual period for filing suit after exhaustion of administrative remedies provided the plaintiff with “ample opportunity to seek judicial review.” Barriero v. NJ BAC Health Fund, 2013 U.S. Dist. LEXIS 181277 at *12-*13 (D.N.J. Dec. 27, 2013).

In Heimeshoff, the Supreme Court recognized that the district courts retain the discretion to use appropriate traditional doctrines to free claimants from a contractual limitations provision “in the rare cases where internal review prevents participants from bringing §502(a)(1)(B) actions within the contractual period.” The Court observed, “[i]f the administrator’s conduct causes a participant to miss the deadline for judicial review, waiver or estoppel may prevent the administrator from invoking the limitations provision as a defense.” The Court also suggested that the doctrine of “equitable tolling” may apply “[t]o the extent the participant has diligently pursued both internal review and judicial review but was prevented from filing suit by extraordinary circumstances.” (Emphasis added.) These cases often include allegations of fraud and other extraordinary facts and are likely to define the limits of Heimeshoff.

Article by:

Of:

Jackson Lewis P.C.

Are Union-Free Strikes Protected? The NLRB (National Labor Relations Board) Thinks So.

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In June 2013, we issued a client alert discussing the efforts of unions and the National Labor Relations Board (NLRB) to target the primarily union-free big box retailer and fast food industries. After describing how Target had come under scrutiny from the NLRB, the client alert detailed how the United Food & Commercial Workers Union (UFCW) and the UFCW-backed group “OUR Walmart” had been coordinating strikes and filing charges with the NLRB against Walmart. The client alert then foreshadowed: “[g]iven the Board’s recent penchant for union activism, do not be surprised if it takes a close look at Walmart’s policies and practices in the coming months.”

As predicted, the Board filed a consolidated complaint against Walmart on January 14, 2014 alleging the union-free retailer violated workers’ rights in response to coordinated strikes across 13 states. The complaint alleges dozens of Walmart supervisors and one corporate executive threatened, disciplined, surveilled, and/or terminated more than 60 workers in response to the union-free strikes.

The complaint is significant for two reasons: (1) the Board is taking the position that union-free workers have a protectable right to strike; and (2) the Board is testing its position against the nation’s largest employer. The Board views the union-free strikes as a form of protected concerted activity, and its press release states that the National Labor Relations Act (NLRA) guarantees employees the right to “act together to try to improve their wages and working conditions with or without a union.” The complaint alleges Walmart violated the NLRA by maintaining a policy that treats absences for participation in strikes as unexcused. The complaint also details alleged retaliatory disciplinary actions taken by Walmart supervisors at particular store locations, though many of the listed locations involved only a single worker being absent.

From an employer perspective, the Board’s position raises many questions. For example, how is a supervisor to know whether a non-union worker is participating in a “strike” or just absent? Can a single worker go on strike, or is there a minimum number of strikers for the activity to be “concerted”? Can strikers be permanently replaced? Are “intermittent” strikes prohibited? It is easy to see why union-free strikes create tough questions for union-free employers.

The Board’s actions against Walmart are worth watching as they come amidst a larger backdrop of worker protests and political debates over minimum wage and working conditions that are likely to remain in the spotlight for the foreseeable future. How courts ultimately grapple with the Board’s position and the resulting questions could have far-reaching effects on the labor market in 2014 and beyond.

Article by:

Of:

Michael Best & Friedrich LLP

4th Cir. First to Apply "Disability" Definition Under ADAAA – ADA Amendments Act of 2008

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On January 23rd, in a ground-breaking decision under the ADA Amendments Act of 2008 (“ADAAA”), the United States Court of Appeals for the Fourth Circuit held that an injury that left the plaintiff unable to walk for seven months and that, without surgery, pain medication, and physical therapy, likely would have rendered the plaintiff unable to walk for far longer can constitute a disability under the Americans with Disabilities Act.  The Fourth Circuit in Summers v. Altarum Institute, Corp. indicated that it is the first appellate court to apply the ADAAA’s expanded definition of “disability.”

The Court reversed a District Court’s dismissal of the plaintiff’s case pursuant to a Rule 12(b)(6) motion.  The U.S. District Court for the Eastern District of Virginia based its dismissal of the plaintiff’s disability-based discharge claim on its view that the plaintiff’s impairment was temporary and therefore not covered by the Americans With Disabilities Act. In its reversal, the Fourth Circuit held that the plaintiff “has unquestionably alleged a ‘disability’ under the ADAAA sufficiently plausible to survive a Rule 12(b)(6) motion.”

Article by:

Timothy M. McConville

Of:

Odin, Feldman & Pittleman, P.C.

Prepare Now for Foreign Talent Acquisition: H-1B Cap Demand Projected to Reach Five-Year High

GT Law

 

I. FISCAL YEAR FOR 2015 H-1B CAP

U.S. Citizenship and Immigration Services (“USCIS”) will start accepting new H-1B petitions for Fiscal Year 2015 on Tuesday, April 1, 2014. As such, employers must start identifying current and future employees who will need to be sponsored for new H-1B petitions as soon as possible, as it is likely that this year’s H-1B quota (“H-1B cap”) will be met within one week of it opening and USCIS will then stop accepting new petitions until next year’s H-1B cap opens on April 1, 2015. Once the H-1B cap closes, employers will need to look at alternative visa options for affected employees to assess whether a viable option is available. Please note that only new H-1B petitions are affected; H-1B petitions involving someone who is already in H-1B status or has previously held H-1B status are not affected by the H-1B cap.

By way of background, U.S. businesses use the H-1B program to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields, such as scientists, engineers, or computer programmers. The number of initial H-1B visas available to U.S. employers (the “H-1B cap”) is 65,000, with an additional 20,000 numbers set aside for individuals who have obtained a U.S. master’s degree or higher. This year’s H-1B cap will leave employers unable to secure all of the highly skilled workers needed to remain competitive and will no doubt re-ignite the debate about the need to implement a comprehensive immigration reform.

The rate at which USCIS has received cap-subject H-1B petitions in the past few years has dramatically increased. The usage of the H-1B program is strongly connected to the health of the U.S. economy, and the increase in the H-1B usage rate corresponds with the economic recovery following the 2008 Economic Recession. In keeping with this trend, business immigration practitioners are predicting that the H-1B quota will be reached by the second quarter of 2014, if not much sooner. In fact, it is possible that initial demand for H-1B visas will exceed the 85,000 supply during the first week of the filing season, April 1, 2014 through April 4, 2014.

If USCIS receives more than 85,000 H-1B Cap Petitions during the first week of availability, then a lottery will be conducted to select the petitions that will be processed under this cap. Those petitions not selected in the lottery will be rejected. Should such a rejection occur, an affected foreign national seeking immigration and employment authorization sponsorship with an employer will be unable to obtain an H-1B petition until October 1, 2015 (with the filing season beginning April 1, 2015). Affected foreign nationals may also be required to forego employment with employers and possibly leave the United States.

II. HISTORICAL CONTEXT

As an historical example, in FY 2009 (October 1, 2008 – October 1, 2009), approximately 163,000 H-1B petitions were filed within the five-day filing period at the beginning of April 2008 and a lottery was needed to select the petitions which would enjoy processing under that year’s cap.

Last year, the FY 2014 H-1B cap was reached within the first week of filing. USCIS received a total of 124,000 H-1B petitions and therefore had to conduct a lottery in order to select the petitions needed to meet the regular cap of 65,000 and master’s cap of 20,000.00

The markedly higher demand for H-1B visa petitions in the FY 2014 season is indicative of an improving job market and economy in the United States, and the economy and need for highly skilled workers have picked up over the last year. Accordingly, we project that the demand for H-1B visas this year will be even greater than last year with up to 40% of all H-1B petitions filed by employers rejected by USCIS pursuant to a randomized lottery system.

III. RECOMMENDED ACTION

Based upon the above, we strongly urge employers to file H-1B cap-subject petitions with USCIS on the earliest possible start date in FY 2015: April 1, 2014. This will allow for the mailing of H-1B cap-subject petitions to USCIS on March 31, 2014, for delivery to USCIS on Tuesday, April 1, 2014, the very first day of filing. This will provide the best possible chance for acceptance of the H-1B petition. It can take two to four weeks or more to gather all of the necessary information and documentation and prepare the requisite forms and supporting documentation for filing of an H-1B petition. Therefore, we recommend that H-1B cases should be initiated immediately.

Article by:

Of:

Greenberg Traurig, LLP

Employee’s Complaint About Union Officials Watching Porn is Deemed “Human Imperfection” But Not Grounds for Retaliation

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A union employee was suspended then terminated after being indicted – as part of an identity theft investigation by the prosecutor – which involved the public posting of names, salaries and Social Security numbers of the company’s managers during a previous strike. During her suspension, the employee claimed that she witnessed the union president and vice president looking at pornography during business hours, which she then reported to the union’s regional leaders. The employee also alleged that the union sabotaged her post-termination grievance process.

As a result, the employee sued the union under section 101 of the Labor-Management Reporting and Disclosure Act, alleging that she was retaliated against for raising a matter of union concern relating to the general interest of its members (i.e., her complaint about union officials watching porn during business hours). The Fourth Circuit found that the employee’s complaint did not rise to the level needed to meet the test and added that “human imperfection must be kept in some perspective.”

On Monday, the United States Supreme Court denied the employee’s bid for certiorari. (see Melissa H. Trail v. Local 2850 United Defense Workers of America et al., case number 13-332).

Article by:

Adam L. Bartrom

Of:

Barnes & Thornburg LLP

Department of State Predicts EB-5 Visa Retrogression for China

GT Law

 

Based upon the demand for EB-5 visa numbers and the volume of approved I-526 Petitions, the Department of State has issued a preliminary warning that a cut-off date may need to be established for China. No other countries in the EB-5 category will be impacted. If a cut-off date is established, it will not take effect until sometime after July 2014. This will only affect those born in mainland China and does not apply to those born in Hong Kong, Macau or Taiwan.

Despite this preliminary warning, EB-5 investors should think hard before delaying the filing of an I-526 Petition or taking any other actions directly related to the possibility of EB-5 retrogression in China. In December 2012 the Department of State also predicted the establishment of a cut-off for China, but then reversed itself in February 2013. New EB-5 visas will become available on the first day of the next fiscal year, October 1, 2014, and the extremely slow processing of I-526 Petitions could spread the demand for EB-5 visas into the next fiscal year. It is important to note, the slow I-526 Petition processing times has also impaired the ability of the Department of State to predict whether EB-5 visa retrogression will occur.

On the flip side, if U.S. Citizenship & Immigration Services (USCIS) speeds up I-526 processing the possibility of EB-5 visa retrogression will increase. As we have noted before, whether or not EB-5 visa retrogression takes place will have no effect on the processing of I-526 Petitions by USCIS. If the EB-5 visa does retrogress, it will likely delay individuals with approved I-526 Petitions from entering the U.S. and obtaining conditional permanent residency. This also may affect the way jobs are allocated to those EB-5 investors in the regional center context. Furthermore, once an I-526 Petition is approved, a child who is a derivative beneficiary of that I-526 Petition does not receive protection under the Child Status Protection Act. This could result in some children of EB-5 investors “aging out” if an I-526 Petition is approved but there are no EB-5 visas available.

In the regional center context, EB-5 visa retrogression may affect EB-5 investors from other countries. Some regional center projects involve loans which cannot be paid off until each EB-5 investor in that project has had their respective I-829 Petition adjudicated. Similarly, many new commercial enterprises in the regional center context have clauses in their operating agreements which prevent distributions from occurring until every EB-5 investor in that new commercial enterprise has had their respective I-829 Petition adjudicated.

Article by:

Dillon R. Colucci

Of:

Greenberg Traurig, LLP

The Seventh Circuit Breaks from the Pack; Prohibits Employers from Challenging the EEOC’s Pre-Lawsuit Conciliation Efforts

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When the United States Equal Employment Opportunity Commission (EEOC) makes a finding of reasonable cause after its investigation of a discrimination charge, Title VII of the Civil Rights Act instructs the EEOC to “…endeavor to eliminate any such unlawful employment practice by informal methods of conference, conciliation and persuasion.” The statute also provides that the EEOC may proceed to filing a lawsuit against the employer only if it “…has been unable to secure from the Respondent a conciliation agreement acceptable to the Commission.” In EEOC v. Mach Mining LLC, No. 13-2456, the Seventh Circuit Court of Appeals (which covers Illinois, Indiana and Wisconsin) recently held that employers may not challenge the EEOC’s pre-lawsuit conciliation efforts as an affirmative defense to the lawsuit. By its decision, the Seventh Circuit broke away from the majority of Federal Courts of Appeal. The EEOC called the ruling in Mach Mining a “landmark” victory in its press release.

As part of its recent initiatives, the EEOC has been very aggressive in filing lawsuits and in the past few years has suffered setbacks with many courts critical of the Agency’s pre-lawsuit investigatory and conciliation efforts. The defense tactic of raising the failure of the EEOC to engage in good faith conciliation efforts as an Affirmative Defense has been widely used by employers’ attorneys in discrimination lawsuits brought by the EEOC. In many cases the EEOC might fail to even attempt face-to-face negotiation, refuse to provide information requested by the employer to assist in conciliation, or simply make a “take it or leave it proposal” before rushing to the courthouse to file a lawsuit.

The essence of the Court’s decision is that conciliation is an informal process in which the EEOC is to “try” to obtain a settlement acceptable to it. The Court also found that Title VII gives the EEOC “sole discretion” to determine whether a conciliation proposal is acceptable and further noted that Title VII is silent as to the standards by which the adequacy of the Agency’s conciliation efforts can be measured. Finally the Court found that permitting the employer to raise inadequate conciliation efforts as a defense to a discrimination claim would undermine the enforcement goals of Title VII. According to the Court, employers could drag out discrimination litigation by turning “what was meant to be an informal investigation into the subject of endless disputes over whether the EEOC did enough before going to court.” At least in Illinois, Wisconsin and Indiana, the EEOC’s methods, the negotiation process and whether the EEOC has acted in good faith in attempting to resolve a charge before filing a lawsuit no longer matters.

Although it is not yet known whether Mach Mining will petition the United States Supreme Court to resolve the split between the Seventh Circuit and the majority of other Courts of Appeal, it is likely this issue will someday be decided by the Supreme Court.

Article by:

Steven J. Teplinsky

Of:

Michael Best & Friedrich LLP