Category: Labor & Employment

‘Work From the Ballpark’—Is the Latest Remote Work Promotion a Foul Ball?

Some professional baseball teams are beginning to promote “Work From the Ballpark” days, encouraging fans to bring their laptops to a weekday afternoon game and work remotely from their seats. Under such promotions, fans can purchase tickets for a special section of the ballpark with access to WiFi, tables, and food so that they could stay logged on at work while enjoying the sights and sounds of the game. Employers are likely accustomed to dealing with employees who play hooky to attend an afternoon baseball game. But with the rise of remote work—and promotions such as these—should employers be concerned with employees logging into work from the ballpark?

While such a promotion might be cheeky marketing to increase attendance for midweek games, it highlights an ongoing concern for employers with remote employees—that instead of diligently working in home offices, employees are working, or attempting to appear to be working, while distracted or in a potentially problematic environment. Indeed, working from a sports stadium could put confidential work communications and information at risk with laptop screens in easy view of onlookers and lead to network security issues with public WiFi.

Employers may want to dust off their remote work policies and evaluate whether they provide clarity around appropriate locations to perform work.

What Can Employers Do About Nontraditional Remote Work Environments?

  1. Clear Remote Work Policies

Employers may want to review their policies to ensure there are clear provisions or guidelines governing what locations are appropriate for working remotely. As an additional element of security and visibility, employers may further want to require that employees performing certain kinds of sensitive work obtain consent to work from a secure location other than home when necessary.

  1. Employee Work Locations

In certain workplaces, employers may want to consider how they monitor employees and their productivity. Many technology tools enable employers to track employees’ online activities or the physical locations of company devices. Of course, employers may want to evaluate employee relations considerations tied to any monitoring program as well as the increasing and myriad state and local laws addressing employer monitoring programs.

  1. Network and Information Security Software

Employers mandating that employees perform any work on employer-provided hardware (e.g., employer-provided laptops) may want to ensure those devices have network and information security and location monitoring software installed and that the technology is up-to-date and sufficient for employees to perform their jobs. Employers that do allow employees to use their own devices (BYOD) may want to require the installation of similar remote work software on those devices. Employers may also want to consider providing employees with internet hotspots for times when employers know employees will be working in public locations to avoid having employees working from shared or open networks. At the same time, employers may want to beware of the risk that such hardware will be lost or stolen.

  1. Security Measures

In addition to hardware requirements, employers may want to consider implementing policies that require employees to take basic security measures on their own while working from a public location. Employers may consider requiring employees to take work phone calls in secure places, require the use of privacy screens over laptop monitors, warn against leaving laptops and other hardware unattended, and mandate other actions to address basic privacy and proprietary information concerns.

  1. Compensation for Time

If an employer does become aware that an employee has performed work at the ballpark or in another location where distractions may have been present, the employer may question whether it must pay the employee for the time the employee logged that day. There are a myriad of federal and state wage-and-hour laws that employers can consult (as well as a review of the employer’s policies) that will answer this question. Usually, however, if employees report that they performed work, the employer may decide to compensate them for their time and evaluate whether there is a separate counseling or disciplinary issue that relates to policy or rule violations to consider.

Key Takeaways

Employees working from home or remotely, at least part of the time, appears to be the future for many workplaces across the United States as technology has made it easier for employees to stay connected with work and complete work tasks. The “Work From the Ballpark” promotion may serve as a reminder for employers that they may want to consider ways to ensure employees are working from appropriate locations to maintain productivity and information security with a remote workforce.

For more Employment Law news, click here to visit the National Law Review.

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Supreme Court Set to Decide Whether NLRA Preempts State Law Claims for Property Damage Caused During Strikes

The U.S. Supreme Court’s upcoming term will include review of whether the National Labor Relations Act (the “Act”) preempts state court lawsuits for property damage caused during strikes, which could have significant implications for employers and unions.

Factual Background

The case – Glacier Northwest Inc. v. International Brotherhood of Teamsters Local Union No. 174 – began over five years ago when the Union in Washington State representing the Employer’s truck drivers went on strike.  The Union timed their strike to coincide with the scheduled delivery of ready-mix concrete, and at least 16 drivers left trucks that were full of mixed concrete, forcing the Employer to rush to empty the trucks before it hardened and caused damage.  The Employer was able to do so, but incurred considerable additional expenses and, because it dumped the concrete in order to avoid truck damage, lost its product.

Employer Brings State Law Suit for Property Damage

After the incident, the Employer sued the Union under Washington State law for intentional destruction of property.  The Union argued that the suit was preempted by the Supreme Court’s decision in San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959) (“Garmon”).  In Garmon, the Supreme Court held that, although the Act does not expressly preempt state law, it impliedly preempts claims based on conduct that is “arguably or actually protected by or prohibited by the Act.”  The Supreme Court held in Garmon that conduct is “arguably protected” when it is not “plainly contrary” to the Act or has not been rejected by the courts or the National Labor Relations Board (the “Board”).

State Court Holdings

The Washington State trial court dismissed the Employer’s suit for property damage because strikes are protected by the Act.  The Washington Court of Appeals reversed, holding that intentional destruction of property during a strike was not activity protected by the Act, and thus, not preempted under Garmon.

Finally, the Washington Supreme Court reversed again, holding that the Act impliedly preempts the state law tort claim because the intentional destruction of property that occurred incidental to a work stoppage was at least arguably protected, and the Board would be better-suited to make an ultimate determination on this legal issue.

Question Before the Supreme Court

The Supreme Court will now determine whether the National Labor Relations Act bars state law tort claims against a union for intentionally destroying an employer’s property in the course of a labor dispute.

Under Garmon, the Act does not preempt suits regarding unlawful conduct that is plainly contrary to the NLRA, and the Employer argues that the strike at issue here was plainly unprotected because of the intentional destruction of property.  In other words, the conduct is not even arguably protected by the Act such that the Act would preempt – it was, rather, plainly unprotected conduct, and thus, the proper subject of a lawsuit.  The Employer also cited the “local feeling” exception to Garmon, which creates an exception to preemption where the States may have a greater interest in acting, such as in the case of property damage or violence.

The Union argued in opposition to the Employer’s certiorari petition that the Employer merely challenged the Washington Supreme Court’s conclusion that the conduct was arguably protected by the Act, and not its reasoning.  Moreover, whether or not the conduct was protected should be decided by the Board, which is better-suited to decide the matter.

Takeaway

Employers should gain much greater clarity into whether they can seek relief from such conduct via a damages lawsuit.  If the Court finds that such conduct is not preempted and may be litigated in state court, such a ruling could go far in protecting employers’ interests in contentious labor disputes and potentially shift the balance of power towards employers during these disputes.

Article By Michael J. Lebowich, Joshua S. Fox, and Thomas B. Fiascone of Proskauer Rose LLP

For more labor and employment legal news, click here to visit the National Law Review.

© 2022 Proskauer Rose LLP.

An Investment Worth Making: How Structural Changes to the EB-5 Program Can Ensure Real Estate Developers Build a Good Foundation for Their Capital Projects

The United States has made major changes to the rules governing its EB-5 program through the enactment of the EB-5 Reform and Integrity Act of 2022 (RIA). The RIA was a component of H.R. 2471—the Consolidated Appropriations Act, 2022—which President Biden signed into law on March 15, 2022. And while the RIA made many sweeping changes to the EB-5 landscape, including establishing an EB-5 Integrity Fund comprised of annual funds collected from regional centers to support auditing and fraud detection operations, two changes in particular are pertinent to developers funding capital investments. First, the RIA altered how developers calculate EB-5 job creation. Second, the RIA prioritizes the processing and adjudication of EB-5 investment in rural area projects, and it tweaked the incentives for high unemployment area and infrastructure projects. Paying careful attention to each of these two areas will enable developers to maximize the benefits afforded to it through the changes enacted by the RIA.

THE RIA MODIFIES JOB CREATION CALCULATIONS

New commercial enterprises under the EB-5 program must create full-time employment for no fewer than 10 United States citizens, United States nationals, or foreign nationals who are either permanent residents or otherwise lawfully authorized for employment in the United States. The RIA made three major changes to how regional centers measure job creation to meet this 10-employee threshold:

  • First, the RIA permits indirect job creation to account for only up to 90% of the initial job creation requirement. For example, if a developer invests in a small retail-residential complex that will eventually create 30 new jobs with the retail stores that will move into the shopping spaces, the developer could count only nine of those jobs toward the 10-employee threshold.
  • Second, the RIA permits jobs created by construction activity lasting less than two years to account for only up to 75% of the initial job creation requirement. The RIA does allow for these jobs to count for direct job creation, however, by multiplying the total number of jobs estimated to be created by the fraction of the two-year period the construction activity will last. For example, if construction on the small retail-residential complex will last only one year and create 100 new jobs, then the RIA would calculate 50 new jobs (100 total jobs multiplied by one-half (one year of a two-year period)) but the developer could count only 7.5 of those 50 jobs toward the 10-employee threshold.
  • Third, while prospective tenants occupying commercial real estate created or improved by the capital investments can count toward the job creation requirement, jobs that are already in existence but have been relocated do not. Therefore, if a restaurant is opening a new location in the small retail-residential complex, the developer could count toward those new jobs toward the job creation requirement. If the restaurant is just moving out of its current location into a space in the retail-residential complex, however, the developer could not count those jobs toward the job creation requirement.

THE RIA CREATES NEW EB-5 VISAS RESERVED FOR TARGETED EMPLOYMENT AREAS AND INFRASTRUCTURE PROJECTS

Under the previous regime, the U.S. government would set aside a minimum of 3,000 EB-5 visas for qualified immigrants who invested in targeted employment areas, which encompassed both rural areas and areas that experienced high unemployment. Now, the RIA requires the U.S. government to set aside 20% of the total number of available visas for qualified immigrants who invest in rural areas, another 10% for qualified immigrants who invest in high unemployment areas, and 2% for qualified immigrants who invest in infrastructure projects. Therefore, at a minimum, the RIA reserves nearly a third of all total EB-5 visas issued by the U.S. government for rural projects, high unemployment area projects, and infrastructure projects. Furthermore, and most significantly, the RIA provides that any of these reserved visas that are unused in the fiscal year will remain available in these categories for the next fiscal year.
The changes to the reserved visa structure create significant incentives for qualified immigrants to invest in rural, high unemployment area, and infrastructure projects. If, for example, the United States government calculates that it should issue 10,000 visas in Fiscal Year 1, then the RIA mandates reserving 2,000 visas for rural projects (20% of total), 1,000 for high unemployment area projects (10% of total), and 200 for infrastructure projects (2% of total). These numbers are significant when considering the RIA’s roll-over provision because it pushes projects in these categories to the front of the line for the green card process. If only 500 of the 20,000 visas for rural projects are used in Fiscal Year 1, then the 1,500 unused visas set aside for rural projects roll over to the next fiscal year. Therefore, if the United States government issues 10,000 new visas in Fiscal Year 2, then 3,500 visas will be reserved for rural projects in the new fiscal year (the 1,500 rollover visas from the previous year plus a new 20% of the total number of visas per the RIA), and the high unemployment area and infrastructure project reserved visas would have a new 1,000 (10% of total) and 200 (2% of total) visas in reserve, respectively.

The RIA changed the structures for investing in both targeted employment areas and non-targeted employment areas, however. The RIA raised the minimum investment amount for a targeted employment area by over 50%, increasing the sum from its previous level of US$500,000 to its new level of US$800,000. The RIA similarly raised the non-TEA, standard minimum investment amount from its previous level of US$1 million to now be US$1.05 million.  Additionally, the RIA modified the process for the creation of targeted employment areas: While under the previous regime, the state in which the targeted employment area would be located could send a letter in support of efforts to designate a targeted employment area, the post-RIA EB-5 regime now permits only U.S. Citizenship and Immigration Services to designate targeted employment areas.

IMPLICATIONS AND RECOMMENDATIONS

The new developments resulting from the RIA will have tangible effects on developers seeking to fund new capital investments. The percentages caps imposed on indirect job creation, relocated jobs, and other categories toward the job creation requirement will likely lengthen the amount of time spent on project creation and completion. These changes also likely should incentivize developers to focus their job creation metrics toward directly created jobs rather than through indirectly created ones. While these changes might increase the length of projects, the broadening of visa reserves through both the percentage caps and the creation of the rollover provisions will likely increase the number of projects in rural areas and high unemployment areas. Developers should carefully consider the composition of their job creation goals and calculate workforce sizes in line with these new requirements. Additionally, developers seeking to ensure they are able to succeed in obtaining visas for their desired employees by avoiding the typical backlog of visa applicants through the EB-5 program should consider investing in rural and high unemployment area projects to take advantage of the broadened application pool.

Article By Brian Graham, Adriana Reyes, and Gregory T. Lewis of K&L Gates

For more immigration legal news, click here to visit the National Law Review.

Copyright 2022 K & L Gates

NYC Issues Proposed Rules for Its Automated Employment Decision Tools Law

On Friday, September 23, 2022, the New York City Department of Consumer and Worker Protection (“DCWP”) released a Notice of Public Hearing and Opportunity to Comment on Proposed Rules related to its Automated Employment Decision Tool law (the “AEDT Law”), which goes into effect on January 1, 2023. As we previously wrote, the City passed the AEDT Law to regulate employers’ use of automated employment decision tools, with the aim of curbing bias in hiring and promotions; as written, however, it contains many ambiguities, which has left covered employers with open questions about compliance.

The proposed rules are intended to clarify the requirements for the use of automated employment decision tools within New York City, the definitions of key terms in the AEDT law, the notices to employees and applicants regarding the use of the tool, the bias audit for the tool, and the required published results of the bias audit.

The DCWP’s public hearing on the proposed rules and deadline for comments are October 24, 2022. Although the proposed rules may be modified prior to adoption, the following summarizes the key provisions.

“Substantially assist or replace discretionary decision making”

The AEDT Law applies to an automated decision tool that is used “to substantially assist or replace discretionary decision making.” It does not, however, specify the type of activities that constitute such conduct or what particular AI-powered employment tools are covered by the law.

The proposed rules attempt to provide guidance on this issue by defining “substantially assist or replace discretionary decision-making” as one of the following actions:

  1. relying solely on a simplified output (score, tag, classification, ranking, etc.), without considering other factors; or
  2. using a simplified output as one of a set of criteria where the output is weighted more than any other criterion in the set; or
  3. using a simplified output to overrule or modify conclusions derived from other factors including human decision-making.

“Bias Audit”

Pursuant to the AEDT Law, before using an automated employment decision tool, a covered employer or employment agency must subject the tool to a “bias audit” no more than one year prior to the use of the of the tool.  The law explains that “bias audit” means an “impartial evaluation by an independent auditor,” but does not otherwise specify who or what constitutes an “independent auditor” or what the “bias audit” must contain. The proposed rules address these gaps.

First, the proposed rules define “independent auditor” as “a person or group that is not involved in using or developing an [automated employment decision tool] that is responsible for conducting a bias audit of such [tool].” This definition does not specify that the auditor must be a separate legal entity from the creator or vendor of the tool and therefore suggests that it may be acceptable for the auditor to be employed by the organization using the tool, provided the auditor does not use and has not been involved in developing the tool.

Second, the proposed rules state that the required contents of a “bias audit” will depend on how the employer or employment agency uses the tool.

If the tool selects individuals to move forward in the hiring process or classifies individuals into groups, the “bias audit,” at a minimum, would need to:

  1. calculate the selection rate for each category;
  2. calculate the impact ratio for each category; and
  3. where the tool classifies candidates into groups, the bias audit must calculate the selection rate and impact ratio for each classification.

If the automated employment decision tool merely scores candidates, the “bias audit” at a minimum, would need to:

  1. calculate the average score for individuals in each category; and
  2. calculate the impact ratio for each category.

The preamble to the proposed rules makes clear that DCWP intends these calculations to be consistent with the Uniform Guidelines on Employee Selection Procedures (“UGESP”), 29 C.F.R. § 1607.4, and borrows concepts from the framework established by the UGESP in the definitions of “impact ratio” and “selection rate.”

Under the AEDT Law, upon completion of a bias audit, and prior to using the automated employment decision tool, covered employers and employment agencies must make the date and summary of the results of the bias audit publicly available on the careers or job section of their website in a clear and conspicuous manner. The proposed rules clarify that publication may be made via an active hyperlink to a website containing the required information, as long as the link is clearly identified as linking to the results of the bias audit. The required information must remain posted for at least six months after the covered employer or employment agency uses the tool for an employment decision.

Required Notices

The AEDT Law also specifies that employers and employment agencies must notify candidates for employment and employees who reside in New York City as follows:

  1. at least ten business days prior to using an automated decision tool, that such a tool will be used to assess or evaluate the candidate or employee, and allow the individual to request an alternative selection process or accommodation;
  2. at least ten business days prior to use, the job qualifications and characteristics that the tool will use in the assessment or evaluation; and
  3. if not disclosed on the employer or employment agency’s website, information about the type of data collected for the tool, the source of such data, and the employer or employment agency’s data retention policy shall be available upon written request by the individual and be provided within thirty days of the written request.

Covered employers and employment agencies have expressed concern about the practical and administrative difficulties of providing the above notices in the fast-paced environment of today’s recruiting and hiring.

In apparent response to these concerns, the proposed rules clarify that the employer or employment agency may provide the notices required by paragraphs (1) and (2) by:

  1. (a) in the case of candidates, including notice on the careers or jobs section of its website at least ten business days prior to the use of the tool, and (b) in the case of employees, including notice in a written policy or procedure that is provided to employees at least ten business days prior to use;
  2. including notice in a job posting at least ten days prior to using the tool; or
  3. (a) in the case of candidates, providing notice via U.S. mail or email at least ten business days prior to use of the tool; and (b) in the case of employees, providing written notice in person, via U.S. mail, or email at least ten business days prior to use.

In short, under the proposed rule, an employer or employment agency could comply with the AEDT Law by providing the required notice when first posting the job.

With respect to the notice requirement in paragraph (3), the proposed rules state that an employer or employment agency must provide notice to covered individuals by including notice on the careers or jobs section of its website, or by providing written notice in person, via U.S. mail, or by email within 30 days of receipt of a written request for such information. If notice is not posted on the website, the employer or agency must post instructions for how to make a written request for such information on its careers or job section of the website.

Finally, although the AEDT Law requires an employer or employment agency to allow covered individuals to request an alternative selection process, the proposed rules state that nothing requires an employer or employment agency to provide an alternative selection process.

Article By Adam S. Forman, Nathaniel M. Glasser, Robert J. O’Hara, Alexander J. Franchilli, and Ridhi D. Madia of Epstein Becker & Green, P.C.

For more labor and employment legal news, click here to visit the National Law Review.

©2022 Epstein Becker & Green, P.C. All rights reserved.

OSHA Expands Criteria for Severe Violator Enforcement Program

In an announcement that expands the criteria for entry into the Occupational Safety and Health Administration’s (OSHA) Severe Violator Enforcement Program, OSHA has signaled that it is making enforcement a priority and that employers with willful, repeat, and failure-to-abate violations will be subject to significant consequences.

Key Takeaways

  • On September 15, 2022, OSHA announced that it was expanding its criteria for entering employers into its Severe Violator Enforcement Program (“SVEP”). The updated SVEP directive is available here.
  • Previously, entry into the program was limited to cases involving fatalities, three or more hospitalizations, high-emphasis hazards, the potential release of a highly hazardous chemical, and enforcement actions classified as egregious.
  • Now, an employer can be entered into the program in cases involving two or more willful, repeat, or failure-to-abate violations, regardless of the hazard involved. They will continue to be subject to entry in the program in certain cases involving fatalities, three or more hospitalizations, and enforcement actions classified as egregious.
  • In light of this expansion, employers should review their compliance records and current health and safety practices and consider whether further actions are needed to mitigate enforcement risks.

Background

In 2010, OSHA created the Severe Violator Enforcement Program to “concentrate[] resources on inspecting employers who have demonstrated indifference to their OSH Act obligations by willful, repeated, or failure-to-abate violations.” Under the original SVEP, OSHA would designate employers as “severe violators” if they were involved in an enforcement action:

  • Involving a fatality in which OSHA found one or more willful, repeat, or failure-to-abate violations;
  • Involving a catastrophe (three or more hospitalizations) in which OSHA found one or more willful, repeat, or failure-to-abate violations;
  • Involving a high-emphasis hazard in which OSHA found two or more high-gravity willful, repeat, or failure-to-abate violations;
  • Involving the potential release of a highly hazardous chemical in which OSHA found three or more high-gravity willful, repeat, or failure-to-abate violations; or
  • Classified by OSHA as “egregious.”

Employers entered into the SVEP were subject to consequences that included mandatory enhanced follow-up inspections, a nationwide inspection of related workplaces, negative publicity, enhanced settlement provisions, and the potential for federal court enforcement under Section 11(b) of the OSH Act.

Updated Criteria

Under the new criteria, employers will continue to be entered into the SVEP in enforcement actions involving a fatality or catastrophe in which OSHA found one or more willful, repeat, or failure-to-abate-violations and in enforcement actions classified as egregious.

In a departure from the original criteria, cases involving two or more high-gravity willful, repeat, or failure-to-abate violations will also be entered into the SVEP, regardless of whether they are linked to a certain hazard or standard. As a result of this change, OSHA expects that more employers will be entered into the SVEP.

Other Key Changes

In addition to expanding the criteria for entry into the SVEP, OSHA made key changes regarding follow-up inspections and removal from the SVEP.

  • Follow-up OSHA inspections must occur within one year, but not longer than two years after the final order. Previously, there was no required timeframe for conducting follow-up inspections.
  • Eligibility for removal will begin three years after the date an employer completes abatement. Previously, that period began running on the final order date.
  • If an employer implements an enhanced settlement agreement that includes the use of a safety and health management system that follows OSHA’s Recommended Practices for Safety and Health Programs, the employer can be eligible for removal after two years.

Implications

These changes signify that OSHA is prioritizing enforcement and intends to impose significant consequences on employers that repeatedly and/or willfully violate OSHA requirements. Employers should review their compliance records and current health and safety practices and evaluate whether additional action is needed to mitigate the risk for willful, repeat, or failure-to-abate violations and entry into the SVEP.

Article By Jayni A. Lanham and Mark N. Duvall of Beveridge & Diamond PC

For more labor and employment legal news, click here to visit the National Law Review.

© 2022 Beveridge & Diamond PC

NLRB’s Proposed New Joint Employer Rule: What to Do Now to Manage the Risk

On September 7, 2022, the National Labor Relations Board (NLRB) issued a Notice of Proposed Rulemaking (NPRM) that would, if adopted, make it much easier for the NLRB to find a company to be a “joint employer” of persons directly employed by its contractors, vendors, suppliers and franchisees. The consequences of a joint employer finding are significant and can lead to: liability for unfair practices committed by the direct employer; a duty to bargain with a union representing the direct employer’s employees; exposure to liability for one’s own conduct that fails to take into account the indirect employer relationship and spread of a union from the direct employer’s employees to the indirect employer.

Joint-employer theory creates far more risk for employers than related doctrines such as single employer or alter ego because, unlike those theories, joint employer status does not require any common ownership or corporate control. Two companies operating entirely at arm’s length can be found joint employers.

The major proposed change relates to the degree of influence that an indirect employer must have to justify a finding of single employer status. Under the current NLRB standard, the indirect employer must actually exercise “immediate and direct” control over key terms of employment, normally limited to wages, benefits, hours and termination.

The proposed rule relaxes that standard in three key ways. First, it eliminates the actually exercise requirement and states that possession of even unused authority can be sufficient.

Second, it does away with the immediate and direct requirement so that influence exercised by the indirect employer through the direct employer can be used to support a finding.

Third, it expands, beyond the list enumerated in the current rule, the types of employment terms control of which will justify a finding of joint employer status. The Obama Board had adopted the currently proposed standard by an NLRB decision, Browning-Ferris Inds. 362 NLRB No. 186 (2015). However, that decision was overturned by the Trump Board’s adoption of the current rule, 85 FR 11184, codified at 29 CFR 103.40, (Feb. 26, 2020). The proposed rule seeks to reinstate Browning-Ferrisas the governing law.

Because Browning-Ferrisand the NPRM endorse pre-1984 NLRB decisions regarding joint employer status, those decisions provide guidance for how the new rule may be enforced. The NLRB and courts frequently relied on what authority was given to the alleged indirect employer in its agreement with the contractor or vendor. Clauses that required or allowed the indirect employer to approve hirings, terminations or wage adjustments to contractor employees usually resulted in finding joint employer status. In addition, cost-plus arrangements, particularly those that were terminable on short notice were often found to support a joint employer finding. Finally, clauses allowing the indirect employer to set work schedules, production rates, or requiring contractor employees to abide by the indirect employer’s work rules and other policies governing conduct also were found supportive of joint employer status.

The proposed rule is still subject to comment and revision, but it is likely to be adopted without significant change. The comment and review period, which closes on November 21, 2022, provides a window in which savvy employers can assess the risks to their organization when the Rule goes into effect. A key step is to examine existing contractual relationships with vendors to identify and modify those terms that may potentially support joint employer status, or, if modification is untenable, to manage the risk through indemnity agreements with the vendor.

Article By Ahmad Chehab and Robert T. Zielinski of Miller Canfield
© 2022 Miller, Canfield, Paddock and Stone PLC

Could Leagues and Teams be Joint Employers Before the NLRB?

The National Labor Relations Board (NLRB) has released a Notice of Proposed Rulemaking to change the standard for determining if two employers may be joint employers under the National Labor Relations Act (NLRA). The proposed rule, expected to become effective sometime in 2023, could make it more likely that professional and collegiate leagues would be found to be joint employers of any unionized professional players or collegiate student-athletes who play for teams that are members of those leagues.

As a joint employer of unionized players of member teams, a league could be jointly responsible for unfair labor practices committed by the teams or the team’s supervisors or managers (i.e., coaches and administrators), be required to participate in collective bargaining negotiations with the teams concerning the wages and other terms and conditions of employment of the players, and picketing directed at the league would be considered primary and therefore permissible (rather than secondary and subject to injunction).

Currently, the NLRB will find two or more employers to be joint employers if there is evidence that one employer has actually exercised direct and regular control over essential employment terms of another employer’s employees. An employer that merely reserves the right to exercise control or that has exercised control only indirectly will not be found to be a joint employer. The NLRB has proposed that the Browning Ferris standard be restored. Under the proposed rule, two or more employers will be found to be joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment.” Importantly – and the critical import of the proposed rule – the NLRB will consider both evidence that direct control has been exercised and that the right to control has been reserved (or exercised indirectly) over these essential terms and conditions of employment when reviewing two or more employers for status as joint employers.

Professional athletes are employees under Sec. 2(3) of the NLRA, of course. As for collegiate student-athletes, NLRB General Counsel Jennifer Abruzzo issued a memorandum, GC 21-08, announcing the intention to consider scholarship athletes at private colleges and universities to be employees because, as she wrote, they “perform services for their colleges and the NCAA, in return for compensation, and subject to their control.” Stating in summation “that this memo will notify the public, especially Players at Academic Institutions, colleges and universities, athletic conferences, and the NCAA, that [she] will be taking that legal position in future investigations and litigation” under the NLRA, Abruzzo signaled that conferences, leagues, and the NCAA will face joint-employer analysis in an appropriate case.

The “essential terms and conditions of employment” will translate to the sports workplace in the nature of game, practice and meeting times, travel and accommodation standards, equipment and safety standards, conduct rules and disciplinary proceedings, the length of a season, the number of games and playoff terms, and numerous other areas. Professional leagues may already coordinate with their member teams on a number of employment terms for players. For collegiate conferences and leagues, this may be new. Under the current standard, a league could better insulate itself from the decisions made by its members’ coaches and administrators by not exercising direct involvement in those matters. Under the proposed rule, a league or conference that merely has the power (even if reserved and unexercised) to make decisions affecting the “work” conditions for student-athletes could be jointly liable along with the institution for decisions made solely by the institution’s agents.

Consequently, conferences and leagues should consider training managers on their responsibility under the NLRA to private sector employees. They should also consider the role they want to play in collective bargaining should any of the student-athletes at their member institutions unionize.

Article By Patrick L. Egan of Jackson Lewis P.C.

For more labor and employment legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2022

DHS May Make Form I-9 Flexibility a Fixture

The Department of Homeland Security (DHS) announced it is considering changes to the Form I-9 documentation examination procedures. As human resources teams know, the remote workplace that became common during the COVID-19 pandemic made an already complicated I-9 process a logistical nightmare. With the U.S. government’s declaration of a national emergency due to the COVID-19 pandemic, DHS and Immigration and Customs Enforcement (ICE) announced certain flexibilities in March 2020 that suspended the requirement of in-person review of I-9 documents when a company was operating remotely due to COVID-19. Those flexibilities have been extended numerous times and are currently set to expire Oct. 31, 2022.

While DHS says it is considering making these temporary flexibilities permanent, the Notice of Proposed Rule Making (NPRM) published last month does not seek to do so. Instead, the NPRM seeks to validate the authority of the DHS secretary to enact flexibilities, offer alternative options, and/or implement a pilot program to evaluate existing and additional alternative I-9 procedures for some or all employers. DHS recognizes that more and more employers are utilizing telework and remote work for their employees and that requiring in-person review of I-9 documents is no longer consistent with work patterns of many businesses.

Some of the more notable possible changes to the I-9 process described in the NPRM include requiring employers to note on the Form I-9 which of the alternative procedures they used; requiring employers to retain copies of I-9 documents; requiring online training on fraudulent document and/or anti-discrimination training for employers who wish to utilize the alternative procedures; and limiting eligibility to use the alternative procedures to employers that utilize E-Verify, the government’s online employment verification system.

Comments to the NPRM are due on or before Oct. 17, 2022.

Article By Rebecca B. Schechter of Greenberg Traurig, LLP

For more immigration legal news, click here to visit the National Law Review.

©2022 Greenberg Traurig, LLP. All rights reserved.

DOT Proposes New Guidance For Medical Examiners To Address CBD Use By Commercial Motor Vehicle Drivers

The U.S. Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA) published a proposed draft Medical Examiner’s Handbook (MEH), including updates to the Medical Advisory Criteria, in the Federal Register on August 16, 2022.  The FMCSA’s regulations provide the basic driver physical qualification standards for commercial motor vehicle (CMV) drivers, in 49 CFR 391.41 through 391.49. DOT Medical Examiners currently make physical qualification determinations on a case-by-case basis and may consider guidance to assist with making those determinations.

FMCSA stated that the goal of the updated MEH and related Medical Advisory Criteria is to provide information about regulatory requirements and guidance for Medical Examiners to consider when making physical qualification determinations in conjunction with established best medical practices. The revised Medical Advisory Criteria, in addition to being included in the MEH, would also be published in Appendix A to 49 CFR part 391. The final version of the criteria would be identical in both publications. FMCSA is proposing to update both the MEH and Medical Advisory Criteria and seeks public comment on these documents until September 30, 2022.  The draft MEH may be viewed here.

Use of CBD with 0.3% THC or Less Is Not Automatically Disqualifying

Under FMCSA regulation 49 CFR 391.41(b)(12)(i), CMV drivers are not permitted to be physically qualified when using Schedule I drugs under any circumstances. The federal Controlled Substances Act lists marijuana, including marijuana extracts containing greater than 0.3% delta-9-tetrahydrocannabinol (THC), as Schedule I drugs and substances. A driver who uses marijuana cannot be physically qualified even if marijuana is legal in the State where the driver resides for recreational or medical use.

However, under current federal law cannabidiol (CBD) products containing less than 0.3% THC are not considered Schedule I substances; therefore, their use by a CMV driver is not grounds to automatically preclude physical qualification of the driver under §391.41(b)(12)(i).

FMCSA emphasized that the U.S. Food and Drug Administration (FDA) does not currently determine or certify the levels of THC in products that contain CBD, so there is no federal oversight to ensure that the labels on CBD products that claim to contain less than 0.3% of THC are accurate. Therefore, drivers who use these products are doing so at their own risk.

FMCSA now proposes that each driver should be evaluated on a case-by-case basis and encourages Medical Examiners to take a comprehensive approach to medical certification and to consider any additional relevant health information or evaluations that may objectively support the medical certification decision. Medical Examiners may request that drivers obtain and provide the results of a non-DOT drug test during the medical certification process, if it is deemed to be helpful in determining whether a driver is using a prohibited substance, such as a CBD product that contains more than 0.3% THC.

This guidance does not impact FMCSA’s drug and alcohol testing regulations.  Use of a CBD product does not excuse a positive marijuana drug test result.

Use of Suboxone and Similar Drugs Is Not Automatically Disqualifying

FMCSA received a large number of inquiries related to Suboxone (a Schedule III drug under federal law, meaning that it has a lower potential for abuse than Schedule I and II drugs).  Treatment with Suboxone and other drugs that contain buprenorphine and naloxone, as well as methadone, are not identified in the FMCSA regulations as precluding medical certification for operating a CMV. FMCSA relies on the Medical Examiner to evaluate and determine whether a driver treated with Suboxone singularly or in combination with other medications should be issued a medical certificate. The Medical Examiner should obtain the opinion of the prescribing licensed medical practitioner who is familiar with the driver’s health history as to whether treatment with Suboxone will or will not adversely affect the driver’s ability to safely operate a CMV. The final medical certification determination, however, rests with the Medical Examiner who is familiar with the duties, responsibilities, and physical and mental demands of CMV driving and non-driving tasks.

Article By Kathryn J. Russo of Jackson Lewis P.C.

For more biotech, food, and drug legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2022

Transforming Business: Exploring Pathways for Women to Join and Impact Corporate Boards

Womble Bond Dickinson hosted a “Transforming Business: Exploring Pathways for Women to Join and Impact Corporate Boards” panel discussion at the Post Oak Hotel in Houston. WBD Chair & CEO Betty Temple joined 50/50 Women on Boards Houston Founder & Chair Susan Knight (moderator), TechnipFMC Executive VP, Chief Legal Officer & Secretary Victoria Lazar and Duy-Loan Le, a Board of Directors member for Wolfspeed, National Instruments, Ballard Power Systems and Atomera and a retired Senior Fellow at Texas Instruments. The panelists also offered insights into how women can make a lasting impact on corporate boards, and this article is based on that discussion.

The issue of women on corporate boards is a classic glass-half-full/glass-half-empty conundrum.

On one hand, the percentage of women on corporate boards reached an all-time high in 2021, and female board representation has grown substantially in the past decade alone. On the other hand, women still make up only 27 percent of Russell 3000 company boards of directors, according to a recent report by 50/50 Women on Boards. Only nine percent of those companies have gender-balanced boards.

Women Representation on Corporate Boards

Percentage of Female Directors on S&P 500 Boards

2021: 30 percent
2020: 28 percent
2011: 16 percent

Percentage of Boards with Two or More Women Directors

2021: 96 percent
2011: 58 percent

Source: 2021 U.S. Spencer Stuart Board Index

Le said, “In the field of technology, especially in the boardroom, often I’m the only woman.” This was particularly true when she joined her first public board 20 years ago, she said, and while Le sees more women in corporate leadership today, she still feels as if she is in a predominantly male world.

Getting appointed to a corporate board—or even a civic or non-profit board—isn’t easy, particularly for women. But the pathway to board membership is clearer than ever for women, thanks in large part to the work of women who have blazed that trail.

Self-Assessment Key to Finding the Right Board

To those outside the boardroom, a board of directors may seem like a closed, secret society. But the panelists said that joining a corporate board actually is much more akin to applying for a job, albeit a job that isn’t publicly advertised.

“The first step on a board journey is to show interest in leadership,” Lazar said.

“It is a journey – it’s not something you can do overnight,” Temple said. Looking back, she said she would have changed her initial approach to board service, even though she was actively counseling public company boards as an attorney at the time.

“I would try to build a resume for a board with the strengths I have to be a fiduciary to a company. They want you to be strategic—to think about the business and where it is going. So you need to be thoughtful about how you can help,” Temple said. For example, if candidates have proven experience in finance, legal, human resources, communications or policy matters, they should showcase those skills.

Temple said, “Boards are looking for specific skillsets so you can be an asset on day one. It’s difficult to be a director-in-training.”

But first, she recommends candidates do a self-assessment of their areas of strength and experience, so they can find corporate boards that are the best fit.

“The key is not to spread the net too wide but focus on where you can have a real impact,” Temple said.

“The key is not to spread the net too wide but focus on where you can have a real impact.”

BETTY TEMPLE, CHAIR & CEO OF WOMBLE BOND DICKINSON

Knight said that board opportunities can include non-profit, advisory, private equity and private company boards, too. “The common thread is that you have a fiduciary responsibility,” she said.

While board members come from a variety of professional backgrounds, many are attorneys or have legal experience.

“There is a large population of potentially qualified board members who are attorneys. It’s a good time to be an attorney looking to serve on a board,” Lazar said. However, she cautioned that companies neither want nor need a “Second General Counsel” on the board. Attorneys have the skills and background to guide companies strategically and help them spot potential problems before they arise. This background is particularly valuable during a corporate restructuring, Lazar said. But lawyers on the board shouldn’t try to micromanage or second-guess the company’s in-house legal team.

She also said attorneys need to bring more than legal experience to the board room. Other skills and experiences are invaluable to board service and should not be ignored.

Finally, Le said building strong relationships is critical to being considered for board service. Candidates who demonstrate a selfless desire to help others are best positioned to earn the type of trust necessary to be selected.

“In all of my experiences, boards came to me – not because I’m better than anyone else, but because they know me,” she said. “Reach out, spread your wings and help other people without expecting anything in return. That’s how people come to know you and want you to be part of their team.”

“There is a large population of potentially qualified board members who are attorneys. It’s a good time to be an attorney looking to serve on a board.”

VICTORIA LAZAR, EXECUTIVE VP, CHIEF LEGAL OFFICER & SECRETARY OF TECHNIPFMC

Finding the Board that Fits

Women absolutely need to assess their personal skills, strengths and experience when they decide to pursue board membership. They also need to pay close attention to the companies they wish to serve and the other board members they would be serving with. The panelists said the first opportunity for board service may not always be the right opportunity.

“I needed to meet the people I was going to be serving with in person. Do we share the same values? Can I collaborate with them? The chemistry was very important,” Le said.

Lazar said networking is a great way to build the types of relationships that lead to board service.

“There are hundreds of ways to meet people who are in position to recommend you for a board,” she said. These include professional organizations, community and civic groups, economic development organizations, bar associations (for attorneys) and more. Getting involved in such organizations can offer valuable leadership opportunities, as well as the chance to get to know corporate board members.

“Work your network and work your resume, so when you have the opportunity, you have demonstrated leadership. Be ready when they tap you on the shoulder,” Temple said.

“Work your network and work your resume, so when you have the opportunity, you have demonstrated leadership. Be ready when they tap you on the shoulder.”

BETTY TEMPLE

What to Know about Board Service

Finding the right fit and getting on a corporate, civic or non-profit board is just the beginning. The panelists all have extensive experience with board service and shared some of their recommendations for finding success as a board member.

For example, Le said board members need to protect themselves from legal liability when they agree to become a board member.

“I’d never serve on a public board without directors and officers (D&O) insurance,” she said, noting that if board members exercise their best judgment and put the company’s interests first, they generally have nothing to worry about.

Temple also noted that board members need to be prepared to serve on committees. Public companies are required to have Audit, Compensation, and Corporate Governance/Nominating & Governance committees. Women who want to serve on boards should consider how their skillsets and experience can benefit those committees. For example, having a background in human resources or corporate compensation is great experience for serving on a compensation committee. Likewise, candidates with experience in ESG or diversity, equity and inclusion (DEI) may be a good fit for a corporate governance committee.

“Committees are a big part of board service, and it is a lot of work – and it’s not just the meetings. Before the meetings, we get hundreds of pages to review,” Le said. “The decisions you make are consequential. Your decisions impact individuals and their lives.”

Lazar also noted that private company boards can be far different from those at public companies. At public companies, the separation between the board of directors and corporate leadership is established by federal law. But at a privately held company, the barriers between board members and corporate leadership may be blurred. Board candidates at a private company need to investigate the boardroom dynamic up front before they agree to join.

Hiring a CEO

Hiring (and firing) a CEO is perhaps the most basic, fundamental role of a governing board. At the very least, it is one of the three core functions of the board, along with strategy and compliance.

Leadership transition can be smooth—such as when a well-liked CEO decides to retire, and the board has ample time to find a replacement and no shortage of good candidates.  But there are instances where the board and CEO part ways on contentious terms—Carly Fiorina’s 2005 ouster from Hewlett-Packard is one high-profile example of when a board and its corporate leader were completely unable to co-exist.

No matter the circumstances, board members must be prepared to deal with leadership transition at any time.

When somebody says, ‘We need to make a move,’ you have to be ready to voice an opinion and be an active participant in the process. It’s one of the most important and difficult decisions a board can make,” Lazar said.

“Sometimes, leadership isn’t about expertise—it’s about dealing with people.”

DUY-LOAN LE, BOARD OF DIRECTORS MEMBER FOR WOLFSPEED, NATIONAL INSTRUMENTS, BALLARD POWER SYSTEMS AND ATOMERA

Le has been in the boardroom during those difficult meetings. She said she experienced a situation where the board had to replace the CEO, who also was the company’s founder and largest shareholder and who initially did not want to leave.

This situation required interpersonal skills, not cold business logic. The CEO/Founder had given so much to the company, and he needed an exit strategy that wouldn’t humiliate him. Le was able to navigate that difficult path during their long, emotional phone call.

“It can be intense. If that situation hadn’t been navigated properly, it would’ve blown up in our face,” she said. “Sometimes, leadership isn’t about expertise—it’s about dealing with people.”

Whether women are looking to serve or are already in the boardroom, the panelists encouraged them to believe in themselves.

“Why wouldn’t you be qualified? Everyone has to do it for the first time,” Lazar said. “Focus on what you have and what you bring.”

“If you’ve been appointed to a public company board, then you’re there – you’ve got it. Just be a great board member and keep doing the right things,” Temple said.

“I remember the feeling the first time I walked into a board room. It was all white men, a generation older than me. But I thought, ‘I have an advantage.’ Because none of these men have lived the life I’ve lived. And what’s the worst that can happen – that they kick me off the board?” Le said. “From there, just do what Betty said and carry yourself with confidence. You are just as good as anyone in that room.”

For additional research and resources, go to the 50/50 Women on Boards website. 50/50 Women on Boards is dedicated to promoting gender balance and diversity on corporate boards.

Article By Elizabeth O. Temple of Womble Bond Dickinson (US) LLP

For more corporate and business legal news, click here to visit the National Law Review.

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