Legislation Archives - Page 6 of 19 - The National Law Forum

State Voting Leave Requirements: A Refresher in Preparation for the 2022 Midterm Elections

Millions of workers across the United States will be headed to the polls on Tuesday, November 8, 2022, for the midterm elections. With control of Congress up for grabs for the final two years of President Joe Biden’s first term, several close Senate races, five states considering ballot measures to legalize recreational marijuana, and 36 states holding elections for governor, this midterm election is one of the most highly-anticipated in decades. Early voting numbers in some states already suggest there could be record turnout.

Despite the proliferation of early and mail-in voting, increased interest in this election could drive more employees to request time off from work to vote. Most states require employers to provide at least unpaid leave from work when polls are not open for a reasonable amount of time outside of employees’ work hours. Here is an overview of voting leave requirements across the United States to help employers prepare for Election Day.

States Without Specific Voting Time Off Requirements

Several states do not require employers to provide any specific leave to allow employees to vote. These include Delaware, Florida, Hawaii, Idaho, Indiana, Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Carolina, Vermont, and Virginia.

While not requiring leave, some of those states more generally protect employees’ rights to vote or participate in politics more generally. For instance, Florida and Mississippi prevent employers from discharging an employee for voting or based on how they voted. Similarly, in Idaho and Michigan, employers may not attempt to influence an employee’s vote by discharging or threatening to discharge an employee from employment.

Delaware and New Jersey prohibit employers from intimidating employees into how to vote or not to vote, and Pennsylvania prohibits employers from interfering with an employee’s right to vote. Louisiana requires that employers with 20 or more employees not make any rule that prohibits an employee from participating in politics. In North Dakota, employers are encouraged, but not required, to allow employees to take leave to vote in all elections when employees’ regular work schedules conflict with the time the polls are open.

Finally, Washington and Hawaii do not have specific voting leave laws, but both conduct elections by mail, eliminating the need to take leave to wait at the polls. Hawaii repealed a prior law providing for up to two hours of voting leave when it switched to vote-by-mail for all statewide elections with the 2020 primary election.

States With Unpaid Voting Leave Laws

Several states require employers to provide employees with some amount of unpaid leave to allow them to vote. Connecticut joined this list of states in June 2021, requiring employers to provide all employees with two hours of unpaid leave to vote in a covered election, though employees must provide the employer notice of the need to take the time off at least two days prior to the election. However, the law is set to sunset on June 30, 2024.

Arkansas and Ohio generally require employees to allow employees to take a reasonable amount of time off, unpaid, to vote on Election Day. In Alabama, employees are allowed to take up to one hour of leave to vote in primary and general elections if the polls are not open at least two hours before or one hour after an employee’s work shift.

In Georgia, employers must give employees “necessary” time off to vote when employees provide reasonable notice of the need for the leave, however, employers are not required to provide time off for employees who have at least two hours before or after their work shift when polls are open to vote. In Massachusetts, unpaid voting leave applies only to employees working in manufacturing, mechanical, or mercantile establishments, and employers are not required to pay for this leave. Further, employees may only request leave for the first two hours after the polls are open.

Some states provide more than two hours of leave for employees to vote, though employers are not required to pay for it. In Wisconsin, employers must allow employees to take up to three consecutive hours of unpaid leave to vote. Employers may not deny a request for this leave, but may designate the specific time of the absence. Kentucky provides the most time for voting leave, requiring employers to allow employees to take unpaid leave for a reasonable time, but not less than four hours, to vote or apply for an absentee ballot. Still, employees must request leave in advance and specify the hours to be used.

States With Paid Voting Leave Laws

Employers in a number of states are required to provide paid time off for employees to vote, at least in circumstances where polls are not open outside of an employee’s regular work hours. Alaska requires employers to allow employees who do not have two consecutive nonworking hours while the polls are open to take off as much work time as necessary to vote “without loss of pay.” Similarly, in Texas, employers must allow employees to take paid time off to vote, unless the polls are not open for two consecutive hours outside of an employee’s working hours.

In Minnesota, employees must have “the time necessary” to go to their designated polling place and return to work on Election Day. In Nevada, employees may request “sufficient” leave time to vote on Election Day, which is determined by the distance of the polling place from the employee’s workplace (1 hour for up to 2 miles; 2 hours for greater than 2 and up to 10 miles; and 3 hours for more than 10 miles). Wyoming requires employers to provide for one hour of leave other than a meal break to vote in a general, primary, or special congressional election unless polls are open for at least three consecutive hours outside of an employee’s work shift.

Many states provide for up to two paid hours of leave for voting. These include: California, Colorado, District of Columbia, Illinois, Iowa, Kansas, Maryland, Nebraska, New Mexico, New York, Oklahoma, South Dakota, and Utah. Iowa, in 2021, reduced the paid leave from three hours to two. On the other hand, D.C. joined the states providing for up to two hours of paid leave for voting in October 2020. The D.C. law further requires employers to post a “Time Off to Vote” notice in a conspicuous location in the workplace. In New York, employers must give employees two hours of paid leave if employees do not have at least four consecutive nonworking hours to vote while polls are open. New Mexico’s leave law includes elections for Native American nations, tribes, or pueblos.

A handful of states provide for up to three hours of paid leave to vote if necessary, including Arizona, Missouri, Tennessee, and West Virginia. These states require employees provide notice of the need for leave prior to Election Day.

Employers may want to prepare for employees to take the leave time afforded by these laws to vote in the November elections.

Article By Ashley Prickett Cuttino and Zachary V. Zagger of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For more election law and legislative news, click here to visit the National Law Review.

Ankura Cyber Threat Intelligence Bulletin: August – September 2022

Over the past sixty days, Ankura’s Cyber Threat Investigations & Expert Services (CTIX) Team of analysts has compiled key learnings about the latest global threats and current cyber trends into an in-depth report: The Cyber Threat Intelligence Bulletin. This report provides high-level executives, technical analysts, and everyday readers with the latest intel and insights from our expert analysts.

Download the report for an in-depth look at the key cyber trends to watch and help safeguard your organization from constantly evolving cyber threats with the latest cyber intelligence, ransomware, and threat insights.

Our latest report explains the following observations in detail:

Law Enforcement Works with Threat Intelligence to Prosecute Human Traffickers

In the age of high-speed internet and social media, criminals have evolved to use information technology to bolster their criminal enterprises and human traffickers are no different. Whether it be through the clearnet or dark web, human traffickers have leveraged the internet to scale their operations, forcing law enforcement to reevaluate how to best combat this problem. In response to the changes in trafficker tactics, techniques, and procedures (TTPs), governments across the world have responded with legislation and policies in an attempt to better thwart the efforts of these criminals. Researchers from Recorded Future’s Insikt Group have published compelling reports as a proof-of-concept (PoC) for a methodology on how law enforcement agencies and investigators can utilize real-time threat intelligence to leverage sources of data in order to aid in tracking, mitigating, and potentially prosecuting human sex traffickers. Download the full report for additional details on law enforcement efforts to prosecute human traffickers and more on the Insikt Group’s findings.

Emerging Threat Organization “MONTI”: Sister Organization or Imposter Threat Group?

Over the past several weeks a new, potentially imposter, threat organization has mimicked the tactics, techniques, procedures (TTPs), and infrastructure of the Conti Ransomware Group. Tracked as MONTI, this doppelganger organization emerged in the threat landscape in July 2022 after compromising a company and encrypting approximately twenty (20) hosting devices and a multi-host VMWare ESXi instance tied to over twenty (20) additional servers. While the July attack pushed the group into the limelight, analysts believe that attacks from the doppelganger organization go back even further into the early summer of 2022. Similarities discovered between Conti Ransomware and the alleged spinoff Monti Ransomware include attack TTPs alongside the reuse of Conti-attributed malicious payloads, deployed tools, and ransom notes. Additionally, the encrypted files exfiltrated by Monti contain nearly identical encryption, which could indicate code re-usage. Read the full report to find out what CTIX analysts expect to see from this group in the future.

Figure 1: Conti Ransom Note

Figure 2: Monti Ransom Note

Iranian State-Sponsored Threat Organization’s Attack Timeline Targeting the Albanian Government

In July 2022, nation-state Iranian threat actors, identified by the FBI as “Homeland Justice”, launched a “destructive cyber-attack” against the Government of NATO-member Albania in which the group acquired initial access to the victim network approximately fourteen (14) months before (May of 2021). During this period, the threat actors continuously accessed and exfiltrated email content. The peak activity was observed between May and June of 2022, where actors conducted lateral movements, network reconnaissance, and credential harvesting.

This attack and eventual data dumps were targeted against the Albania-based Iranian dissident group Mujahideen E-Khalq (MEK), otherwise known as the People’s Mojahedin Organization of Iran. MEK is a “controversial Iranian resistance group” that was exiled to Albania and once listed by the United States as a Foreign Terrorist Organization for activity in the 1970s but was later removed in late 2012. Albania eventually severed diplomatic ties with Iran on September 7, 2022, and is suspected to be the first country to ever have done so due to cyber-related attacks. For a more detailed analysis of this attack and its ramifications, download our full report.

Figure: Homeland Justice Ransom Note Image

Banning Ransomware Payments Becomes Hot-Button Issue in State Legislature

There is a debate occurring in courtrooms across the United States regarding the ethics and impacts of allowing businesses to make ransomware payments. North Carolina and Florida have broken new ground earlier this year passing laws that prohibit state agencies from paying cyber extortion ransom demands. While these two (2) states have been leading the way in ransomware laws, at least twelve (12) other states have addressed ransomware in some way, adding criminal penalties for those involved and requiring public entities to report ransomware incidents. Download the full report to discover what experts think of government ransomware payment bans and the potential effects they could have on ransomware incidents.

Threat Actor of the Month: Worok

ESET researchers discovered a new cluster of the long-active TA428 identified as “Worok.” TA428 is a Chinese advanced persistence threat (APT) group first identified by Proofpoint researchers in July 2019 during “Operation LagTime IT”, a malicious attack campaign targeted against government IT agencies in East Asia. Download the full report for an in-depth look at Worok’s tactics and objectives, and insights from our analysts about the anticipated future impact of this group.

New List of Trending Indicators of Compromise (IOCs)

IOCs can be utilized by organizations to detect security incidents more quickly as indicators may not have otherwise been flagged as suspicious or malicious. Explore our latest list of technical indicators of compromise within the past sixty (60) days that are associated with monitored threat groups and/or campaigns of interest.

Article By Ted Theisen and Jason Hale of Ankura

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

Presidential Pardon for Simple Marijuana Possession Leaves Out Many

Severe immigration consequences for certain non-U.S. citizens remain despite President Joe Biden’s pardon of all prior federal offenses for simple marijuana possession.

On October 6, 2022, President Biden took a major step toward the decriminalization of marijuana, pardoning all prior federal offenses for simple marijuana possession. Although this pardon will affect only approximately 6,500 individuals who were convicted of simple marijuana possession under federal law before October 6, 2022, it does not affect the much larger number of individuals who have been convicted of a marijuana possession offense under state law. To the disappointment of immigration advocates, the pardon does not benefit non-U.S. citizens who were not lawfully present in the United States at the time of their conviction, even if their conviction was under federal law.

Moreover, because marijuana is still listed as a Schedule I drug under the federal Controlled Substances Act:

Non-U.S. citizens can still be denied entry to the country for use of marijuana or for working or actively investing in the marijuana industry;
Immigration authorities may deny a non-U.S. citizen’s application for lawful permanent residence (green card) or naturalization on the ground that they have a conviction for a marijuana-related offense, an admission by the non-U.S. citizen that they have used marijuana in the past, or that they have worked or is actively investing in the marijuana industry; and
The Department of Homeland Security can still place individuals, including green card holders, into removal proceedings (deportation) as a result of marijuana-related offenses, unless the conviction was for simple possession of less than 30 grams.

In his order, President Biden urged governors to consider similar state law pardons for simple marijuana possession charges, which might affect many more individuals. President Biden has also asked the Department of Health and Human Services to consider changing the current Schedule I classification for marijuana. If one of these changes occurred, non-U.S. citizens would substantially benefit, as their state convictions for marijuana-related offenses might be pardoned, thus lowering the negative consequences for immigration purposes.

For now, however, non-U.S. citizens should still be wary of marijuana use, or working or investing in the marijuana industry, even in places in the United States or abroad where those activities are legal. While there may not be federal prosecutions for the use and possession of marijuana, there may be severe immigration consequences for non-U.S. citizens, because the use and possession of marijuana remains illegal in certain states.

Article By Carolina Guiral Cuervo of Jackson Lewis P.C.

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

California PFAS Legislation Will Dramatically Impact Businesses

We previously reported on three significant pieces of California PFAS legislation that were before California’s Governor Newsom for ratification. Two of the bills were passed, which means that several categories of products will have applicable PFAS bans. The third bill was not signed by the Governor, which would have required companies to report certain data to the state for goods sold in or otherwise brought into California that contain PFAS.

With increasing attention being given to PFAS in consumer goods in the media, scientific community, and in state legislatures, the California PFAS bills underscore the importance of companies anywhere in the manufacturing or supply chain for consumer goods to immediately assess the impact of the proposed PFAS legislation on corporate practices, and make decisions regarding continued use of PFAS in products, as opposed to substituting for other substances. At the same time, companies impacted by the PFAS legislation must be aware that the new laws pose risks to the companies involvement in PFAS litigation in both the short and long term.

California PFAS Bills

One of our prior reports was on the first significant PFAS bill that Governor Newsom was expected to sign into law – AB 2771 – and which was indeed passed into law. The bill prohibits the manufacture, sale, delivery, hold, or offer for sale any cosmetics product that contains any intentionally added PFAS. The law would go into effect on January 1, 2025. The bill defines a cosmetics products as “an article for retail sale or professional use intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance.”

The second bill signed into law by the Governor is AB 1817, which bans the use of PFAS in textiles manufactured and sold in California. More specifically, the bill prohibits, beginning January 1, 2025, any person from “manufacturing, distributing, selling, or offering for sale in the state any new, not previously owned, textile articles that contain regulated PFAS” and requires a manufacturer to use the least toxic alternative when removing PFAS in textile articles to comply with these provisions. The bill requires a manufacturer of a textile article to provide persons that offer the product for sale or distribution in the state with a certificate of compliance stating that the textile article is in compliance with these provisions and does not contain any regulated PFAS. The bill specifically regulates three categories of textiles:

(1) “Textile articles” means textile goods of a type customarily and ordinarily used in households and businesses, and include, but are not limited to, apparel, accessories, handbags, backpacks, draperies, shower curtains, furnishings, upholstery, beddings, towels, napkins, and tablecloths;

(2) “Outdoor apparel” means clothing items intended primarily for outdoor activities, including, but not limited to, hiking, camping, skiing, climbing, bicycling, and fishing; and

(3) “Apparel”, defined as “clothing items intended for regular wear or formal occasions, including, but not limited to, undergarments, shirts, pants, skirts, dresses, overalls, bodysuits, costumes, vests, dancewear, suits, saris, scarves, tops, leggings, school uniforms, leisurewear, athletic wear, sports uniforms, everyday swimwear, formal wear, onesies, bibs, diapers, footwear, and everyday uniforms for workwear…outdoor apparel and outdoor apparel for severe wet conditions.

The bill that California’s Governor vetoed was AB 2247, which would have established reporting requirements for companies that utilize products or substances that contain PFAS and which are used in California in the stream of commerce. “The bill would [have] require[d], on or before July 1, 2026, and annually thereafter, a manufacturer, as defined, of PFAS or a product or a product component containing intentionally added PFAS that, during the prior calendar year, is sold, offered for sale, distributed, or offered for promotional purposes in, or imported into, the state to register the PFAS or the product or product component containing intentionally added PFAS, and specified other information, on the publicly accessible data collection interface.”

Impact of California PFAS Legislation On Businesses

California PFAS legislation places some of the most significant and widely used consumer products in the crosshairs with respect to PFAS. While other states have banned or otherwise regulated PFAS in certain specific consumer goods, California’s bills are noteworthy given the economic impact that it will have, considering that California is the fifth largest economy in the world.

It is of the utmost importance for businesses along the whole cosmetics supply chain to evaluate their PFAS risk. Public health and environmental groups urge legislators to regulate these compounds. One major point of contention among members of various industries is whether to regulate PFAS as a class or as individual compounds. While each PFAS compound has a unique chemical makeup and impacts the environment and the human body in different ways, some groups argue PFAS should be regulated together as a class because they interact with each other in the body, thereby resulting in a collective impact. Other groups argue that the individual compounds are too diverse and that regulating them as a class would be over restrictive for some chemicals and not restrictive enough for others.

Companies should remain informed so they do not get caught off guard. States are increasingly passing PFAS product bills that differ in scope. For any manufacturers, especially those who sell goods interstate, it is important to understand how those various standards will impact them, whether PFAS is regulated as individual compounds or as a class. Conducting regular self-audits for possible exposure to PFAS risk and potential regulatory violations can result in long term savings for companies and should be commonplace in their own risk assessment.

Article By John Gardella of CMBG3 Law

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

IRS Delays Additional Amendment Deadlines for Major Retirement Legislation

The IRS has extended additional deadlines for required retirement plan amendments, similar to the extensions we discussed last month found here. Notice 2022-45 extends the deadline for amending qualified retirement plans to comply with certain provisions of:

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (“Relief Act”)

Notice 2022-45 specifically extends the amendment deadlines for Section 2202 of the CARES Act and Section 302 of the Relief Act. Section 2202 of the CARES Act permitted plans to: (1) provide coronavirus-related distributions, (2) increase retirement plan loan sizes, and (3) pause retirement plan loan payments. Section 302 of the Relief Act permitted qualified disaster distributions.

Notice 2022-45 extends the amendment deadlines relating to the applicable provisions in the CARES and Relief Acts for non-governmental qualified plans and 403(b) plans to December 31, 2025. Governmental plans (including qualified plans, 403(b) plans maintained by public schools, and 457(b) plans) are granted further delays depending on the underlying circumstances of the plan sponsor. These extended deadlines under Notice 2022-45 align with the previous deadline extensions under Notice 2022-33. Accordingly, most plan sponsors will be able to adopt a single amendment to comply with the SECURE Act, BAMA, the CARES Act, and the Relief Act.

Notably, tax-exempt 457(b) plans do not appear to be covered by the relief granted by either Notice 2022-33 or Notice 2022-45. Accordingly, these plans remain subject to a December 31, 2022, amendment deadline.

Article By Brian T. Gallagher, Samantha A. Kopacz, and Samuel L. Parks of Miller Canfield

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

BREAKING NEWS: Biden to Pardon Federal Marijuana Possession Convictions

In a historic move, today, President Joe Biden announced a three-step program to bring broad changes to federal cannabis policy. As an initial step towards reform, President Biden will pardon all federal offenders convicted of simple marijuana possession. According to administration officials, the pardons will be issued through an administration process overseen by the Department of Justice. Those eligible for the pardons will receive documentation showing they were officially forgiven for their crime.

“No one should be in jail just for using or possessing marijuana,” Biden said in a video announcing his executive actions. “It’s legal in many states, and criminal records for marijuana possession have led to needless barriers to employment, housing, and educational opportunities. And that’s before you address the racial disparities around who suffers the consequences. While white and Black and brown people use marijuana at similar rates, Black and brown people are arrested, prosecuted, and convicted at disproportionate rates.”

“Too many lives have been upended because of our failed approach to marijuana. It’s time that we right these wrongs,” the President said.

As a second step in the program, Biden also encouraged Governors to take similar steps to pardon state simple cannabis possession charges.

And as the last step in this program, President Biden directed the Department of Health and Human Services and Attorney General Merrick Garland to “expeditiously” review the cannabis’s status as a Schedule I controlled drug pursuant to the federal Controlled Substances Act.

Article By Sarah A. K. Blitz and Whitney Hodges of Sheppard, Mullin, Richter & Hampton LLP

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

Proposed Senate Bill Would Deny Deductions for NIL Contributions

On September 28, 2022, U.S. Senators Ben Cardin (D-Md.), a member of the Senate Finance Subcommittee on Taxation and Internal Revenue Service (IRS) Oversight, and John Thune (R-S.D.), ranking member of the Subcommittee on Taxation and IRS Oversight, introduced the Athlete Opportunity and Taxpayer Integrity Act, which seeks to deny charitable deductions for any contribution used by the donee to compensate college athletes for the use of their name, image, or likeness (“NIL”) by reason of their status as athletes.

One entity type that is impacted by the Athlete Opportunity and Taxpayer Integrity Act are “NIL collectives” that have been established as 501(c)(3) organizations. These types of NIL collectives have been used to allow donors to make tax deductible contributions that are then used to fund NIL opportunities for college athletes, for example, by having a college athlete provide services to a separate charity in exchange for payment from the NIL collective. A press release from Senator Cardin noted that “[s]uch activity is inconsistent with the intended purpose of the charitable tax deduction, and it forces taxpayers to subsidize the potential recruitment of – or payment to – college athletes based on their NIL status.”

Notably, the Opportunity and Taxpayer Integrity Act would only apply to charitable deductions. A person engaged in a trade or business would still be able to deduct payments to college athletes for the use of their name, image, or likeness if such payments qualify as ordinary and necessary business expenses.

Although it is not clear at this time whether the Opportunity and Taxpayer Integrity Act will pass, it does indicate increased scrutiny over nonprofit NIL collectives and possibly other NIL arrangements.

Article By Richard T. Hewlett, Shawn A. Strand, and Jessica E. Visser of Varnum LLP

For more election law and legislative news, click here to visit the National Law Review.

Cyber Incident Reporting for Critical Infrastructure Act

On September 12, 2022, the Cybersecurity and Infrastructure Security Agency (“CISA”) released a Request for Information (“RFI”) seeking public input regarding the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (“CIRCIA”). The public comment period will close on November 14th, 2022. The RFI provides a “non-exhaustive” list of topics on which CISA seeks public input, including:

Definitions and criteria of various terms, such as “covered entity,” “covered cyber incident,” “substantial cyber incident,” “ransom payment,” “ransom attack,” “supply chain compromise” and “reasonable belief;”
Content of reports on covered cyber incidents and the submission process (e.g., how entities should submit reports, report timing requirements, and which federal entities should receive reports;
Any conflict with existing or proposed federal or state cyber incident reporting requirements;
The expected time and costs associated with reporting requirements; and
Common best practices governing the sharing of information related to security vulnerabilities in the U.S. and internationally.

In March 2022, President Biden signed CIRCIA into law. CIRCIA creates legal protections and provides guidance to companies that operate in critical infrastructure sectors, including a requirement to report cyber incidents within 72 hours, and report ransom payments within 24 hours. The CISA website features more information about the law, the RFI, and a list of public listening sessions with CISA to provide input.

Article By Privacy and Cybersecurity Practice Group at Hunton Andrews Kurth

For more privacy and cybersecurity legal news, click here to visit the National Law Review.

California Law Prohibits Cooperation with Out-of-State Entities Regarding Lawful Abortion

In response to Dobbs v. Jackson Women’s Health Organization, California Governor Gavin Newsom recently signed AB 1242 into law, which “prohibits law enforcement and California corporations from cooperating with out-of-state entities regarding a lawful abortion in California.”

In particular, AB 1242 prohibits California companies that provide electronic communication services from complying with out-of-state requests from law enforcement regarding an investigation into, or enforcement of, laws restricting abortion.

Sponsored by California Assembly member Rebecca Bauer-Kahan and California Attorney General Rob Bonta, AB 1242:

takes an innovative legal approach to protect user data. The bill prohibits California law enforcement agencies from assisting or cooperating with the investigation or enforcement of a violation related to abortion that is lawful in California. This law thereby blocks out-of-state law enforcement officers from executing search warrants on California corporations in furtherance of enforcing or investigating an anti-abortion crime. For example, if another state wants to track the movement of a woman traveling to California seeking reproductive health care, the state would be blocked from accessing cell phone site tower location data of the woman by serving a warrant to the tech company in California. In addition, if another state wants Google search history from a particular IP address, it could not serve an out-of-state search warrant at Google headquarters in CA without an attestation that the evidence is not related to investigation into abortion services. Although the first state to enact such a law, as California often is when it comes to privacy rights, we anticipate that other states will follow suit and that these laws will be hotly contested in litigation.

Article By Linn F. Freedman of Robinson & Cole LLP

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

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

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Category: Legislation

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