Category: Uncategorized

Government Shutdown Pushes Back Cadillac Tax

On January 22, 2018, Congress passed an interim funding bill to end the three-day government shutdown that also pushed back the effective date of the Affordable Care Act’s controversial “Cadillac Tax.”  The Cadillac Tax imposes an excise tax on group health plans that provide benefits in excess of certain thresholds.  The new legislation pushes the effective date back an additional two years to January 1, 2022.

© 2018 McDermott Will & Emery
This article was written by D. Finn Pressly of McDermott Will & Emery

California Expands Its Pay Equity Act, Twice: Compliance Challenges for Employers

Under recently-amended California law, an employer must not discriminate in compensation paid to employees based upon the employee’s gender, race or ethnicity, with limited exceptions. While gender has always been in the law, race and ethnicity were recently added to the protections afforded under the state.

These changes occurred due to concerns about the adequacy of existing state law, despite the Pay Equity Act being in existence for over 65 years. California law is similar to the federal Equal Pay Act. Most states have equal pay laws. California legislators have also advocated action by Congress on this issue.

Prior California law essentially prohibited an employer from paying an employee at a wage rate less than the rate paid to employees of the opposite sex in the “same establishment” for “equal work” on jobs the performance of which required equal skill, effort and responsibility and which were performed under similar working conditions.

SB 358

Governor Jerry Brown signed Senate Bill (SB) 358 by State Senator Hannah-Beth Jackson into law on October 6, 2015. Many practitioners call SB 358 the “strictest equal pay law” in the nation. It took effect on January 1, 2016. SB 358 prohibits an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for “substantially similar work” when viewed as a composite of skill, effort, and responsibility. Prior language concerning the “same establishment” requirement is now considered as a possible bona fide factor.

The bill made various changes to California’s Equal Pay Act related to gender wage inequality. SB 358 seeks to strengthen existing California law that precludes an employer from discriminating against an employee in pay on the basis of gender.  Prior to the enactment of SB 358, Section 1197.5 mandated that an employer provide equal pay for equal work, unless a bona fide factor other than gender justified the differential.

          SB 358 changed statutory language to require equal pay for “substantially similar work,” instead of the harder to establish “equal work.” The law clarified that the burden of proof is on employers to demonstrate that wage differentials are based on some factor other than sex.

In an effort to eliminate the risk of a stringent interpretation of this standard, SB 358 amends the Labor Code to specify that an employee shall not be paid less than another employee who is performing “substantially similar” job duties, unless a bona fide factor exists.  As such, the new language should achieve the intent of the law and eliminate any employer from seeking to justify a wage differential through meaningless differences in job duties under the guise that such positions are not “equal.”

Moreover, SB 358 allows employees to overcome “pay secrecy” by prohibiting employers from taking adverse action against employees who discuss wages with one another, as well as prohibiting employers from retaliating against employees who invoke the Equal Pay Act, or encourage co-workers to do so.

As explained by the Department of Industrial Relations (DIR), Governor Brown signed the California Fair Pay Act (SB 358), which strengthens the Equal Pay Act in a number of ways, including by:

  • Requiring equal pay for employees who perform “substantially similar work, when viewed as a composite of skill, effort, and responsibility.”
  • Eliminating the requirement that the employees being compared [must] work at the “same establishment.”
  • Making it more difficult for employers to satisfy the “bona fide factor other than sex” defense.
  • Ensuring that any legitimate factors relied upon by the employer are applied reasonably and account for the entire pay difference.
  • Explicitly stating that retaliation against employees who seek to enforce the law is illegal, and making it illegal for employers to prohibit employees from discussing or inquiring about their co-workers’ wages.
  • Extending the number of years that employers must maintain wage and other employment-related records from two years to three years.

An important aspect of SB 358 is that the measure contains several findings and declarations by the Legislature to help set the stage for why these changes to the Labor Code were made.  Specifically, the Legislature determined that:

“In 2014, the gender wage gap in California stood at 16 cents on the dollar. A woman working full time year round earned an average of 84 cents to every dollar a man earned. This wage gap extends across almost all occupations reporting in California. This gap is far worse for women of color; Latina women in California make only 44 cents for every dollar a white male makes, the biggest gap for Latina women in the nation.

“While the state’s overall wage gap is slightly lower than the national average of 78 cents to the dollar, the persistent disparity in earnings still has a significant impact on the economic security and welfare of millions of working women and their families. Collectively, women working full time in California lose approximately $33,650,294,544 each year due to the gender wage gap. The wage gap contributes to the higher statewide poverty rate among women, which stands at 18 percent, compared to approximately 15 percent for men, and the poverty rate is even higher for women of color and single women living with children.

“California has prohibited gender-based wage discrimination since 1949. Section 1197.5 of the Labor Code was enacted to redress the segregation of women into historically undervalued occupations, but it has evolved over the last four decades so that it is now virtually identical to the federal Equal Pay Act of 1963 (29 U.S.C. Sec. 206(d)). However, the state provisions are rarely utilized because the current statutory language makes it difficult to establish a successful claim.

“Pay secrecy also contributes to the gender wage gap, because women cannot challenge wage discrimination that they do not know exists. Although California law prohibits employers from banning wage disclosures and retaliating against employees for engaging in this activity, in practice many employees are unaware of these protections and others are afraid to exercise these rights due to potential retaliation.

“To eliminate the gender wage gap in California, the state’s equal pay provisions and laws regarding wage disclosures must be improved.”

The proponents argued that “The California Fair Pay Act will strengthen the state’s existing equal pay laws by eliminating loopholes that prevent effective enforcement and by empowering employees to discuss their pay without fear of retaliation.” Proponents of SB 358 also claimed that the wage gap would cut the poverty rate for working single mothers by nearly half, from 28.7 percent to 15 percent.

Proponents specifically argued that SB 358 will ensure employees performing substantially equivalent work are paid fairly by requiring equal pay for work of a comparable character, eliminating the outdated same establishment requirement, by replacing the any bona fide factor other than sex catch-all defense with more specific affirmative defenses, and strengthening protections for workers who inquire about or discuss their wages or those of their coworkers.

SB 358 requires employers to affirmatively demonstrate that a wage differential is based upon one or more specified factors including a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex. Moreover, the new law requires the employer to demonstrate that each factor relied upon is applied reasonably and that the factor(s) relied upon account for the entire wage differential.

As a separate matter, SB 358 prohibits an employer from discharging or in any manner discriminating or retaliating against any employee by reason of any action taken by the employee to invoke or assist in any manner the enforcement of these provisions of the Labor Code. The new law authorizes an employee who has been discharged or discriminated or retaliated against to recover in a civil action reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer, including interest and equitable relief. It also requires a civil action to recover wages for retaliation to be commenced no later than one year after the cause of action occurs.

Finally, the bill prohibits an employer from prohibiting an employee from disclosing the employee’s own wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his or her rights under these provisions. And the new law increases the duration of employer recordkeeping requirements from 2 years to 3 years.  SB 358 extends existing enforcement mechanisms for wage discrimination to claims for retaliation and provides a one-year statute of limitations for retaliation claims.

SB 358 provides further clarity to the term “bona fide factor” under which an employer may provide differential pay for a legitimate business purpose, such as to compensate an employee that has more extensive training, education or experience.  Proponents believe this clarification will help employers navigate their pay structure and avoid unnecessary litigation regarding what business purposes qualify as a “bona fide factor”.

This factor applies only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. A business necessity is defined as an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve.

There are some who believe that the changes made by SB 358 eliminated some justifications for a difference in pay.  However, those examining the changes to Section 1197.5 need to be aware of the statement of legislative intent provided by the author’s Letter to the Senate Daily Journal set forth below:

May 26, 2015 SENATE JOURNAL 1099

MOTIONS, RESOLUTIONS AND NOTICES

MOTION TO PRINT IN JOURNAL

Senator Jackson moved that the following letter be printed in the journal.

Motion carried.

May 26, 2015

The Honorable Kevin de León President pro Tempore of the Senate

Dear Senator De León: SB 358 is a measure intended to narrow the gender wage gap by modifying California’s equal pay law. I write this letter to clarify my intent of striking “work is performed at different geographic locations” and “work is performed on different shifts or at different times of day” from the bill. I would like to request that this letter be printed in the Senate Daily Journal regarding Senate Bill 358. Although the introduced version of the bill listed “work is performed at different geographic locations” and “work is performed on different shifts or at different times of day” as statutory exceptions to the equal pay law that could be claimed by an employer in response to a complaint alleging a gender-based wage differential, the current version does not specifically list those factors because each of those factors may be a “bona fide factor,” as that factor is defined in this bill. Accordingly, the amendments to this bill that strike “work is performed at different geographic locations” and “work is performed on different shifts or at different times of day” should not be construed as the Legislature’s intent to make those factors unavailable to an employer responding to an equal pay complaint. Rather, the employer may claim a “bona fide factor,” that may be specifically described by the employer as work that is performed at different geographic locations or work that is performed on different shifts or at different times of day, so long as the employer can prove that the factor is consistent with business necessity, as specified on in the bill.

Sincerely,

HANNAH-BETH JACKSON Senator, 19th District

As set forth in the author’s statement of legislative intent, SB 358 provides additional guidance to employers regarding justifications for wage differentials.  The author’s letter makes clear that work performed on different shifts or in different establishments still exist as justifications for a difference in pay. As a result, the business community actively supported the passage of SB 358 because the bill will provide clarity to the law and reduce the potential for costly litigation, and it strengthened the “bona fide factor” language.

This letter by Senator Jackson was submitted the day that SB 358 passed off the Senate Floor with a unanimous vote. As such, it was done contemporaneously with the vote of the full Senate and should be afforded considerable weight by a court of law when interpreting the changes made to Section 1197.5 by SB 358.

Finally, the California National Organization for Women (CA NOW) opposed SB 358 unless the bill was amended to include protections for wage discrimination for categories such as race, ethnicity, LGBTQ and disability status.  According to CA NOW, it is wrong to deny certain employees full protection under the California Equal Pay Act because these groups are afforded protections from other anti-discrimination laws. This position set the stage for the following year’s enactment of SB 1063.

SB 1063

On September 30, 2016, Governor Jerry Brown signed SB 1063 by State Senator Isadore Hall and Assembly Bill (AB) 1676 by Assemblywoman Nora Campos.  SB 1063 expands the Equal Pay Act to include a new basis for wage equality, while AB 1676 prohibits employers from basing an employee’s pay on prior salary alone.  Although both bills contain the same statutory language, SB 1063 was chaptered last by the Secretary of State. Because both bills contained “chaptering language” and SB 1063 was chaptered last, SB 1063 is the operative law.

SB 1063 became effective on January 1, 2017 and it prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work. In addition, the new law specifies that prior salary cannot, by itself, justify any disparity in compensation under the “bona fide factor” exception contained in existing law.  These changes by the bill were made to Labor Code Section 1197.5.

SB 1063 adds the following language to Labor Code Section 1197.5(b):

(b) An employer shall not pay any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates:

(1) The wage differential is based upon one or more of the following factors:

(A) A seniority system.

(B) A merit system.

(C) A system that measures earnings by quantity or quality of production.

(D) A bona fide factor other than race or ethnicity, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a race- or ethnicity-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.

(2) Each factor relied upon is applied reasonably.

(3) The one or more factors relied upon account for the entire wage differential.

            Numerous business groups opposed SB 1063, but were neutral on AB 1676, because these groups favored allowing last year’s significant Equal Pay Act measure time to be tested and evaluated. They argued that SB 358, which enacted the FPA changes, should not be expanded until the law’s scope is fully known as the statutory changes only took effect on January 1.  SB 358 was hailed “as the strongest equal pay law for women in the country.”

In opposing SB 1063, business groups argued that, while no employee should be paid differently based upon any protected classification contained in California’s Labor Code, the Legislature should allow time for a newly-created task force, as well as time for the courts through pending litigation, to interpret and implement the new boundaries of the equal pay law before seeking to expand it even further.

According to the legislative policy committee’s bill analysis, “SB 1063 expands the prohibitions set forth in California’s Equal Pay Act to include discrimination based on race or ethnicity. By adding these provisions, this bill, among other things: (1) duplicates the provisions laid down in the Equal Pay Act regarding gender, but restates them to prevent wage rate discrimination based on race or ethnicity, and (2) mirrors the enforcement mechanism and penalties for wage rate discrimination based on gender and includes discrimination based on race or ethnicity.”

Senator Hall, as the author of SB 1063, argued that current state law does not recognize that wage discrimination is confined to women. Women of color, who are paid less than white women, should be able to make a claim under California’s Equal Pay Act. Men of color, who are paid less than white men, should be able to make a claim under California’s Equal Pay Act as well. Ideally, he argued, other protected classes, such as members of the LGBTQ or disabled community should be included in this remedy, but the addition of race and ethnicity begins the process of making pay equity in California more inclusive.

            According to the Assembly Appropriations Committee fiscal analysis of SB 1063, there will be unknown, likely significant costs (at least half a million dollars annually) to the Department of Industrial Relations (DIR) to process claims associated with wage discrimination based on race or ethnicity.

AB 1676

SB 1063 also incorporates changes made to Labor Code Section 1197.5 by AB 1676 (Campos). These changes clarify that prior salary, by itself, must not justify any disparity in compensation between workers of the opposite sex and the bill makes findings and declarations on the wage differential between men and women, recent case law, and that this bill is a codification of existing law.

The author of AB 1676, Assemblywoman Campos, argued that “the practice of paying someone solely based on their prior salary was not specifically addressed, recent administrative court decisions have made clear this is discriminatory and locks in a low level of pay for many women. AB 1676 addresses this by making explicit and clear that paying someone less on the basis of a prior salary is discriminatory.”

In terms of enforcement, existing law authorizes an employee paid lesser wages in violation of the law to file a complaint with the DLSE and authorizes the employee, the DLSE or the Department of Industrial Relations to commence a civil action for the wages the employee was deprived of because of the violation, interest on those wages, and liquidated damages. In addition, under current law, an employer or other person who violates or causes a violation of that prohibition, or who reduces the wages of any employee in order to comply with that prohibition, is guilty of a misdemeanor.

4. Other Provisions of Existing Law

Existing law provides that any employer who violates the law is liable in the amount of the employee’s wages and interest that the employee is deprived of, which is in addition to liquidated damages.

The DIR or the DLSE may commence and prosecute, unless otherwise requested by the employee or affected group of employees, a civil action on behalf of the employee and on behalf of a similarly affected group of employees to recover unpaid wages and liquidated damages for violations of the Act, and are entitled to recover costs of suit.

In addition, existing law provides that any employee receiving less than the wage to which the employee is entitled may recover in a civil action the balance of the wages, including interest and an equal amount as liquidated damages, together with the costs of the suit and reasonable attorney’s fees, notwithstanding any agreement to work for a lesser wage.

5. Further Guidance Forthcoming

In July 2016, a Task Force was created by the California Commission on the Status of Women and Girls to specifically develop guidelines for employees and employers regarding the new standards established in SB 358.   The Task Force is seeking to identify challenges to both employers and employees with regard to the implementation of SB 358, as well as explore potential definitions for the new terms incorporated into the law by SB 358.  This guidance provided by the Task Force will hopefully provide employers with resources to proactively ensure their pay structure is compliant with these laws and thereby limit costly litigation.

In addition, the private sector has been given a great deal of advice by practitioners on how to comply with the new laws. For example, employers should prepare to:

  1. Conduct or review job evaluations of substantially similar jobs based on a composite of skill, effort, and responsibility system wide
  2. Ensure that any wage differences can be explained by seniority, merit, quantity or quality of production, or another bona fide factor other than sex
  3. Document that the bona fide factors for wage differences are reasonably applied
  4. Add the Fair Pay Act to policies, procedures and handbooks prohibiting non-discrimination and retaliation
  5. Eliminate any policies and procedures prohibiting disclosure or discussion of, inquiry or organizing about wages
  6. Update recordkeeping to at least three years
  7. Train managers, supervisors, human resources professionals and others in the enterprise on compliance with the California Fair Pay Act.

6. Addressing Criticism about SB 358

California businesses will need to closely examine their wage policies, along with justifications they utilize for paying employees different wage amounts. In order to meet the burden of proving a “bona fide factor” exists, proper documentation will be required to demonstrate pay is not in any way based upon the employee’s sex, race or ethnicity.

California’s statute requiring equal pay has been on the books for over 65 years and, as such, the state has a long history of discouraging unequal pay rates between male and female employees doing essentially the same job. There is debate in the legal community whether SB 358 will make it easier to sue California employers and impose additional legal burdens upon businesses or not.

The following are some of the criticisms of SB 358:

The term “substantially similar” work is broader than the prior standard of “equal work.” The change from “equal work” to “substantially similar work” essentially codifies existing interpretations of the former term. A strict interpretation of prior law is not how the law’s federal counterpart or similar anti-discrimination laws have been interpreted to preclude gender-based wage discrimination in California.

In addition, the introduced version of SB 358 would have changed “equal work” to “comparable work,” a more difficult standard for employers to meet and one that was rejected at the federal level. As a result, the business community was successful in narrowing the language contained in SB 358.

Another criticism is that SB 358 expands obligations upon employers in this state. There are only two instances where there are substantive changes to employer obligations in the bill because the other provisions of SB 358 are a codification of existing court decisions and practice:

  • The bill increases the period of time that an employer must retain records from two years to three years.
  • The bill adds an existing cause of action for retaliating or discriminating against employees for exercising their rights under this section of the Labor Code.

The next criticism of SB 358 is that the “bona fide factor” language has been narrowed. While additional language was added to the Labor Code to explain what constitutes a bona fide factor and how an employer can demonstrate that such a factor justifies a wage differential, for the first time, California has codified three additional factors that fall under the bona fide factor affirmative defense: training, education and experience.

This new statutory language represents a significant improvement over existing law and the vast majority of wage differentials in practice are based upon one or more of these factors. The business community was successful in getting these additional factors enumerated in statute.

Another criticism of SB 358 is that the “same establishment” limitation has been eliminated from the law. While much has been made about the removal from the introduced version of SB 358 of the “different geographic location” and “shift differential” language, those affirmative defenses are still viable. The Legislature intended those affirmative defenses to fall under the bona fide language.

The final criticism is that employers now have the burden of demonstrating that the wage differential was justified. Although existing law was silent, and SB 358 adds language that “the employer demonstrates…,” the employer has always had the burden to affirmatively demonstrate that a wage differential is based upon one or more specified factors including a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than gender.

Although SB 358 has additional language that is not in current law, such as “each factor is applied reasonably” and “one or more factors account for the entire wage differential,” these showings had to be made by employers under existing practice. It is not as if, under existing law, an employer could claim that a bona fide factor accounted for 80% of the wage differential and the remainder was due to gender and, therefore, no violation of the law had occurred.

While SB 358 is an important tool in the fight against unequal pay based upon gender, most of the statutory changes made by the bill are consistent with court interpretations and existing litigation practice in this area of the law. With nearly half the workforce comprised of women, the California business community supports efforts to ensure that workers in this state are not paid differently based solely upon their gender. SB 358 attempts to strike a fair balance between the interests of employers and employees in this state to address a very real problem.

[1]Labor Code Section 1197.5.

[2] Current law establishes exceptions to that prohibition where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

[3]See SB 358 from the 2015 Legislative Session and SB 1063 from the 2016 Legislative Session.

[4] California has prohibited gender-based wage discrimination since 1949.

[5]See 29 U.S.C. Sec. 206(d).

[6] The National Conference of State Legislatures (NCSL) compiled its most recent list in August 2016.http://www.ncsl.org/research/labor-and-employment/equal-pay-laws.aspx.

[7]See, e.g., AJR 47 (Block), Chapter 145 from the 2012 Legislative Session, a measure that urged the Congress to reintroduce and adopt the Paycheck Fairness Act to help close the gender wage gap.

[8]See Labor Code Section 1197.5 prior to amendments made by SB 358 in 2015. See, also, Senate Floor Analysis of SB 358.

[9] It is Chapter 546 of the Statutes of 2015.

[10] “California Governor Signs Strictest Equal Pay Law in the U.S.” October 7, 2015.http://www.seyfarth.com/publications/MA100715-LE. “California Lawmakers Pass Toughest U.S. Law Requiring Equal Pay,” August 27, 2015. https://www.bloomberg.com/politics/articles/2015-08-27/california-lawmakers-pass-toughest-u-s-law-requiring-equal-pay.

[11] According to the Department of Industrial Relations (DIR), “Although the law does not specifically define “wage rates,” it refers to the wages or salary paid, and also other forms of compensation and benefits.”http://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm.

[12] This phrase replaced the prior “equal work” language.

[13] According to the DIR, “substantially similar work” refers to work that is mostly similar in skill, effort, responsibility, and performed under similar working conditions.  Skill refers to the experience, ability, education, and training required to perform the job.  Effort refers to the amount of physical or mental exertion needed to perform the job.  Responsibility refers to the degree of accountability or duties required in performing the job.  “Working conditions” has been interpreted to mean the physical surroundings (temperature, fumes, ventilation) and hazards. http://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm.

[14] As indicated by Senator Jackson’s letter to the Daily Journal discussed below.

[15] See Senate Floor Analysis of SB 358.

[16] California’s Department of Industrial Relations has a website that provides guidance on SB 358. It is entitled “California Equal Pay Act: Frequently Asked Questions”. http://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm.

[17] According to the DIR, “The main differences are that the new law:

  • eliminates the requirement that the jobs that are compared must be located at the same establishment;
  • replaces a comparison of “equal” work with a comparison of “substantially similar” work; 
  • makes it more difficult for employers to justify unequal pay between men and women;
  • adds new express anti-retaliation protections for workers that assist employees with bringing claims under the Act;
  • provides that an employer cannot prohibit workers from disclosing their wages, discussing the wages of others, or inquiring about others’ wages.”http://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm

[18] See Senate Floor Analysis of SB 358.

[19] See Senate Floor Analysis of SB 358.

[20] Id. 

[21] Id. 

[22] See Section 1(a) of SB 358 as enacted.

[23] See Section 1(a) of SB 358 as enacted.

[24] See Section 1(c) of SB 358 as enacted.

[25] See Section 1(c) of SB 358 as enacted.

[26] See Section 1(c) of SB 358 as enacted.

[27] See fact sheet by proponents. https://www.cela.org/legislative/SB358FairPayFactSheet.pdf.

[28] See Senate Floor Analysis of SB 358.

[29] Id. 

[30] According to the DIR, “Under the new law, an employer can defeat an Equal Pay Act claim by proving that the difference in pay for substantially similar work is due to:

  • seniority;
  • merit;
  • a system that measures production; and/or
  • a ‘bona fide factor other than sex.’

In addition, an employer must show that it applied the above factor(s) reasonably and that the factor(s) accounts for the entire difference in wages.” http://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm.

[31] According to the DIR, “Under the new law, an employer may defeat an Equal Pay Act claim by proving that the wage differential is due to a ‘bona fide factor other than sex,’ but to succeed on this defense, the employer must also prove that the factor is 

  • not based on or derived from a sex-based factor;
  • job related; and
  • consistent with a business necessity.

Examples of a ‘bona fide factor other than sex’ include education, training or experience.”http://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm.

[32] According to the Senate Floor Analysis of SB 358, the “Assembly amendments clarify the bona fide factor affirmative defense.”

[33] Labor Code Section 1197.5(a)(2).

[34] Labor Code Section 1197.5(j)(1).

[35] Labor Code Section 1197.5(j)(2).

[36] Labor Code Section 1197.5(j)(3).

[37] Labor Code Section 232.

[38] Labor Code Section 1197.5(d).

[39] Labor Code Section 1197.5(h)

[40] Labor Code Section 1197.5(a)(1)(D).

[41] See Senate Floor Analysis of SB 358.

[42] Id. 

[43] Id. 

[44] See Senator Jackson’s Letter to the Senate Journal dated May 26, 2015.

[45] Id. 

[46] See Senate Floor Analysis of SB 358.

[47] Id. 

[48] Id. 

[49] Chapter 866 of the Statutes of 2016.

[50] It is referred to as the “Wage Equality Act of 2016.”

[51] As such, the provisions of SB 1063 are effective, rather than those contained in AB 1676.

[52] Section 3 of SB 1063 contains the following language: “Section 1.5 of this bill incorporates amendments to Section 1197.5 of the Labor Code proposed by both this bill and Assembly Bill 1676. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2017, (2) each bill amends Section 1197.5 of the Labor Code, and (3) this bill is enacted after Assembly Bill 1676, in which case Section 1 of this bill shall not become operative.”

[53] Labor Code Section 1197.5(b).

[54] Labor Code Sections 1197.5(a)(3) and (b)(3).

[55] See Section One of SB 1063.

[56] The language related to equal pay protection based upon gender is contained in Section 1197.5(a).

[57] See Senate Floor Analysis of SB 1063.

[58] Id. 

[59] See, e.g., Los Angeles Times, October 6, 2015, “California now has one of the toughest equal pay laws in the country.”

[60] See letter from California Chamber of Commerce and other groups dated.

[61] See Assembly Judiciary Committee analysis of SB 1063.

[63] See Senate Floor Analysis of SB 1063.

See Assembly Appropriations Committee analysis of SB 1063.

[64] Pay equity bills were a top priority of the Legislative Women’s Caucus. See, e.g., Los Angeles Times, March 24, 2015.http://www.latimes.com/local/political/la-me-pc-california-womens-caucus-pay-equity-child-care-poverty-20150324-story.html.

[65] See Sections 1197.5(a)(3) and (b)(3), which now contain the following: “The one or more factors relied upon account for the entire wage differential. Prior salary shall not, by itself, justify any disparity in compensation.” (new language in italics)

[66] See Assembly Labor & Employment Committee analysis of AB 1676.

Labor Code Section 1197.5(e).

[68] See Section 2 of SB 1063 which amended Labor Code Section 1199.5. As a result, subdivision (a) now provides that “Pays or causes to be paid any employee a wage less than the rate paid to an employee of the opposite sex  another sex, race, or ethnicity,  as required by Section 1197.5.”

[69] Labor Code Sections 1197.5(b) and (c).

[70] Labor Code Section 1197.5(f).

[71] Labor Code Section 1197.5(g). 

[72] According to its website, “The Commission on the Status of Women and Girls, a nonpartisan state agency, works in a culturally inclusive manner to promote equality and justice for all women and girls by advocating on their behalf with the Governor, the Legislature and other public policymakers, and by educating the public in the areas of economic equity including educational equity, access to health care including reproductive choice, violence against women and other key issue areas identified by the Commission as significantly affecting women and girls.”

[73] http://www.women.ca.gov/CaliforniaPayEquityTaskForce.aspx.

[74] See, e.g., DLA Piper law firm guidance. https://www.dlapiper.com/en/us/insights/publications/2015/10/california-pay-equity-measure-signed-into-law/.

[75] Id. 

[76] Which is more than a decade longer than the comparable federal statute has existed.

[77] The Federal Equal Pay Act

[78] For Exampl, Title IX. 

[79] See the following statement of legislative intent by the bill’s author, Senator Hannah Beth Jackson, in her May 26, 2015 letter to the Sena

© 2018 University of the Pacific, Calif. All rights reserved.

This article was written by Chris M. Micheli of McGeorge School of Law, University of the Pacific

2018 Tax Reform Series: Goodbye to the Individual Mandate

This is the seventh article in our series covering various tax and employee benefits-related changes contained in the Tax Cuts and Jobs Act signed by the President on December 22, 2017.

Once significant change made by the Act, summarized below, is the elimination of the Affordable Care Act’s individual mandate, effective 2019.

Background

Long an unpopular feature of the ACA, the individual mandate requires most Americans (other than those who qualify for a hardship exemption) to purchase a minimum level of health coverage. Those who fail to do so are liable for a penalty of $695 for an adult or 2.5 percent of household income, whichever is greater.

The Act accomplished the elimination of the individual mandated by reducing the penalty amounts to $0 and zero percent, respectively.

Although often cited as an egregious example of government over-reach, the individual mandate does not impact the majority of Americans, specifically those who receive their health coverage through their employers or through public programs such as Medicare and Medicaid.

Impact of Elimination

The nonpartisan Congressional Budget Office (“CBO”) projects that the elimination of the individual mandate will spare taxpayers $43 billion in penalties that they would otherwise have paid through 2027. The CBO also projects that the elimination will result in 4 million people dropping health insurance coverage in 2019, with 13 million more becoming uninsured by 2027.

The elimination is expected to save the government $300 billion over the next ten years, in the form of fewer people receiving insurance subsidies or Medicaid, according to the CBO.

The CBO estimates that marketplace premiums will rise 10 percent without the individual mandate.

Employer Mandate and Other ACA Features Still in Place

The Act leaves many aspects of the ACA intact, including the individual marketplace, premium subsidies for those earning between 100% and 400% of the federal poverty rate, the ban on insurers charging more or denying coverage based on health factors, and Medicaid expansion.

Most significantly for employers, however, is the employer mandate and reporting requirements, which remain in force. Accordingly, applicable large employers will need to plan around the Code section 4980H(a) (“A”) penalty — which can apply if an employer does not offer minimum essential coverage to at least 95% of its full-time employees and at least one full-time employee buys subsidized marketplace coverage — and the Code section 4980H(b) (“B”) penalty — which can apply if an employer offers full-time employees coverage that is not affordable or does not meet minimum value requirements.

In 2018, A penalty is $2,320 (or $193.33 per month) multiplied by the total number of full-time employees (minus 30). The B penalty is $3,480 (or $290 per month) for each full-time employee who buys subsidized marketplace coverage (capped by the amount of the A penalty).

Jackson Lewis P.C. © 2018
This article was written by Stephanie O. Zorn of Jackson Lewis P.C.

Raise Your Hand If You’re Confused about I-9 Reverifications for Employees with TPS

Temporary Protected Status (TPS) is a humanitarian benefit available to foreign nationals who are unable to return to their home countries because of certain temporary conditions including ongoing armed conflict such as civil war, an environmental disaster like an earthquake, hurricane, epidemic, or other extraordinary conditions. During TPS designation, qualifying foreign nationals are not removable from the US and can obtain work authorization and travel permission.

The Department of Homeland Security (DHS) has recently terminated TPS for nationals of El Salvador, Haiti, Nicaragua, and Sudan but has granted a period of orderly departure to allow time for this population to wind up their affairs in the US. This has left employers in a quandary about which TPS holders remain able to work and how to comply with Form I-9 Employment Eligibility Verifications.

To help ease the confusion, the chart below illustrates TPS-designated countries, the dates by which beneficiaries were required to re-register and, for those who do re-register, how long their current Employment Authorization Cards (EAD) are automatically extended pending decisions of EAD renewal applications. The TPS termination dates for El Salvador, Haiti, Nicaragua, and Sudan are also included.

Country

Re-Registration Period Ends

EAD Auto-Extended Until

TPS End Date

El Salvador

03/19/2018

09/05/2018

09/09/2019

Haiti

03/19/2018

07/21/2018

07/22/2019

Honduras

02/13/2018

07/04/2018

–

Nepal

12/27/2016

06/24/2017

–

Nicaragua

02/13/2018

07/04/2018

01/05/2019

Somalia

03/20/2017

–

–

South Sudan

11/20/2017

05/01/2018

–

Sudan

12/11/2017

05/01/2018

11/12/2018

Syria

09/30/2016

03/31/2017

–

Yemen

03/06/2017

09/03/2017

–

As reflected in the chart above, sometimes DHS issues a blanket automatic extension of the expiring EADs for TPS beneficiaries of a specific country in order to allow time for EADs with new validity dates to be issued. The automatic extension periods are available to those TPS beneficiaries who timely re-register and apply to renew their EADs.

Although an employer cannot specify which documents an employee can present in connection with the I-9 Employment Eligibility Verification process, TPS beneficiaries with automatic EAD extensions may present an expired EAD bearing the C19 eligibility code along with a Form I-797C Notice of Action indicating the eligibility category code A12 or C19. The codes need not be the same.

The M-274 Handbook for Employers is an excellent resource in determining how to complete the Form I-9 for those employees with automatic EAD extensions. It specifies that:

“For a current employee, update Section 2 of Form I-9 with the new expiration date as follows:

  • Draw a line through the old expiration date and write the new expiration date in the margin of Section 2;

  • Write EAD EXT in Section 2;

  • Initial and date the correction.”

For TPS beneficiaries, the new expiration date should correspond with the respective date as noted in the chart above. An employee whose employment authorization is automatically extended along with his/her EAD may cross out the “employment authorized until” date in Section 1, write the new expiration date as reflected in the chart, initial and date the change.

A new employee may present the expired EAD and Form I-797C Notice of Action indicating USCIS’s receipt of the employee’s timely filed renewal application. When completing Section 1, the employee should enter the corresponding date from the chart in the “employment authorized until mm/dd/yyyy” field.

When completing Section 2, the employer should enter into the Expiration Date field the date the automatic extension period expires, not the expiration date on the face of the expired EAD. The employer should enter the receipt number from the I-797C Notice of Action as the document number on Form I-9. Note that reverification is required when the employee’s automatic extension ends.

While an employer is not required to be an expert in I-9 documents and review, having access to reliable resources comes in handy and will take you to the head of the class.

 

Copyright © 2018 Womble Bond Dickinson (US) LLP, All Rights Reserved.
This post was written by Jennifer Cory of Womble Bond Dickinson (US) LLP.

Getting Past Spectre and Meltdown: A Practical Guide

Recently, there has been a lot of discussion regarding the Spectre and Meltdown vulnerabilities. This alert provides a simple overview of what these vulnerabilities are, what systems could be affected, as well as steps that companies can take to reduce the risks that these vulnerabilities create.

  • What Are The Spectre And Meltdown Vulnerabilities?

Spectre and Meltdown are the names of two flaws that can affect a computer’s central processing unit (“CPU”). Certain CPU chips made by Intel and other manufacturers are vulnerable to the Spectre and Meltdown flaws. The CPU allows the computer to carry out instructions provided by a computer program. Unfortunately, security flaws that affect the CPU permeate the functionality of the computer system. As the CPU is a core aspect of the computer system, most every aspect of system functionality is at risk.Both the Spectre and Meltdown flaws work by causing issues with system memory, which computers use to store data. The way that system memory stores information and how it is accessed is crucial to system performance and security.   Security researchers have created a page explaining the different aspects of Spectre and Meltdown in more detail. “Meltdown breaks the mechanism that keeps applications from accessing arbitrary system memory. Consequently, [potentially malicious] applications can access system memory.” Meanwhile, “Spectre tricks other applications into accessing arbitrary locations in their memory. Both attacks use side channels to obtain the information from the accessed memory location.”

  • Which Systems Are Impacted By The Spectre And Meltdown Vulnerabilities?

Any systems that use or rely upon CPU chips that are vulnerable to the Spectre and Meltdown flaws could be impacted. Unfortunately this is a vast swath of potentially vulnerable systems. Most companies will use some physical computers locally, such as laptops, desktops, tablets, smart phones and others, as well as leveraging certain remotely provided computing resources, maintained by another portion of the same entity or by an external vendor.

As such, every company that leverages computing resources will need to ascertain which systems are exposed to the Spectre and Meltdown vulnerabilities. This will involve:

  1. Identifying and understanding any local physical computing resources that the company allows employees, contractors or others to use on behalf of the company.
  2. Working with qualified personal to identify which of these devices contain CPUs subject to the Spectre or Meltdown vulnerabilities.
  3.  Identifying all externally provided computing resources, such as cloud computing resources leveraged by the company.
  4.  Working with each identified provider of the externally provided computing resource to understand whether the provided computer resource leverages CPUs that are subject to the Spectre or Meltdown vulnerabilities.
  • What Steps can Companies Take to Reduce Spectre and Meltdown Risk?

Given the widespread nature of the Spectre and Meltdown vulnerabilities companies may wish to focus on using their limited resources effectively to reduce their risk in the most effective manner possible, while understanding that completely eliminating all Spectre and Meltdown vulnerability risk may not be possible. After performing the steps above to identify which computing systems leveraged by the company are at risk, companies will want to consider taking the steps below:

  1. Run vendor provided software management tools to identify and update applicable computer systems with appropriate released vendor patches to reduce Spectre and Meltdown exploit risk. Ensure that appropriate personnel are aware that system testing should occur after this process runs, as performance and stability issues could be created.
  2. Review and update applicable security policies, incident response, and business continuity plans if these documents are not effectively providing guidance and empowering appropriate stakeholders to identify and remediate Spectre and Meltdown vulnerability risk.
  3. Identify any systems where particularly sensitive data is kept and engage with appropriate internal or external personnel to identify and implement appropriate compensating controls due to any increased risk of data exfiltration as a result of potentially latent Spectre or Meltdown vulnerability risk.
  4. Consider working with appropriate legal counsel to identify whether Spectre and Meltdown present legal risks to the company, as potentially informed by the data being stored, or any products or services being offered by the company to external entities. Companies will likely want to be particularly concerned as to any increased data breach risk, or the risk that products and services being offered to others are subject to known Spectre or Meltdown vulnerabilities that have not been effectively addressed and disclosed.
©1994-2018 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
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The Changing Ethical Landscape of Litigation

Robert A. Clifford, founder and senior partner of the firm, will serve as moderator of the two-hour program that has been approved for two hours of professional responsibility credit by the MCLE Board. Joining him will be panelists Robert Burns, Professor of Ethics, Northwestern University School of Law; Jayne Reardon, Executive Director, Illinois Supreme Court Commission on Professionalism; and the Hon. Deborah Dooling (ret.) who served on the bench for two decades in the Cook County Circuit Court.

Now in its 11th year, the free webinar attracts more than 3,000 attendees as panelists review a number of hypotheticals and discuss the appropriate Rules of Professional Conduct that apply. Among the topics expected to be discussed are confidentiality, privilege and work product, conflicts of interest, contacting non-clients, dealing with experts, disclosure obligations, social media and electronic discovery.

The webinar will be held live at DePaul University School of Law on February 15, 2018 and is presented by Clifford Law Offices.

See more events on the NLR event page.

Foreign Entrepreneurs – The Facts

The United States has long been attractive to foreign entrepreneurs due to the county’s historically open marketplaces and tolerance for new ideas and new products. Foreign entrepreneurs have come to the United States in many different ways; however, there is still no direct “entrepreneur visa” or immigration status for entrepreneurs looking to come to the United States in order to grow a U.S.-based business enterprise. On this account, oftentimes foreign entrepreneurs will run into roadblocks while in the United States as they seek to both grow their businesses and obtain and maintain lawful immigration status.

More so, with global competition growing, the United States is no longer the default stop for the best and the brightest to set up their shops—in fact, numerous studies have shown that a growing number of would-be entrepreneurs are choosing to start and run their business elsewhere due to financial and societal incentives. Other countries are seeking to prevent their native entrepreneurs from leaving as nations such as China and India set up policies to dissuade would-be entrepreneurial immigrants from leaving their home countries.

Legal Avenues for Foreign Born Entrepreneurs

Entrepreneurial Parole

On January 17, 2017, the Department of Homeland Security (DHS) published a final rule establishing a parole program for international entrepreneurs seeking to improve the ability of certain startup founders to remain in the United States legally in order to grow their companies and help create new jobs for U.S. workers.

On July 11, 2017, less than a week before the final rule was set to take effect, DHS delayed the implementation of the rule, foreshadowing that it would seek to rescind the rule altogether pursuant to an Executive Order (EO) signed by the President on January 25, 2017. DHS originally estimated that approximately 3,000 entrepreneurs will be eligible to apply under this rule annually. If the rule is allowed to take effect, these entrepreneurs would then be granted a stay of up to 30 months, with the possibility of an additional 30-month extension if they meet certain criteria, in the discretion of DHS.

As there are currently limited visa options for international entrepreneurs, this rule would create an avenue in our immigration system for innovators and allow entrepreneurs the opportunity to establish new businesses in the United States, contribute to the economy, and help maintain the United States’ competitive edge in the world marketplace of ideas.

E Visas

Some entrepreneurs may be eligible for an E visa, which is a visa category reserved for nationals of certain countries that have treaties with the United States. Specifically, there is the E-1 and the E-2 visa category—E-1s can be for foreign nationals who conduct “substantial trade” between the United States and their home country, while E-2s can be for foreign nationals who come to the United States in order to develop and direct the operations of an enterprise in which they have invested a “substantial amount” of capital. Also, the E visa applicant must control at least 50% of the company.

E visas are nonimmigrant visas, meaning that they are by nature “temporary”; however, there is no limit to the amount of extensions an applicant may be eligible for, and, in certain instances, it can lead to permanent residence (i.e., a green card).

H-1B Visas

Although most people probably don’t think of the H-1B visa as an “entrepreneurial visa,” with proper planning and advice the H-1B visa category can be a viable option for an entrepreneur looking to start their own company and invest in the United States. For USCIS to grant an individual an H-1B visa they must demonstrate that there is a valid “employer-employee” relationship; this can be an issue with entrepreneurs since they are more often than not their own bosses and therefore will have trouble establishing the requisite employer-employee relationship between themselves and their companies. Even so, one option for the entrepreneur would be to set up an independent board of directors for their company that can exercise control over the entrepreneur’s employment. This requires extremely careful planning and oversight and the assistance of competent counsel. Also, the fact that H-1B visas are statutorily capped at 85,000 per year makes this visa category less appealing for entrepreneurs.

EB-5 Investor Visas

The EB-5 program is a statutory program that allows for investors to obtain conditional permanent resident status (and eventually full permanent resident status) based on a qualifying investment of between $500,000 and one million dollars. The required investment amount is dependent on the type of program in which the investor is participating (whether it be participating in a USCIS-designated regional center, investing in Targeted Employment Area, or direct investment in a new or existing company); however, in any scenario, in order for the investor to eventually obtain their full-fledged permanent residency, they must be able to create at least 10 U.S. jobs within two years. If the investment is successful after the initial 2 year trial period, then the investor may apply for their permanent green card with USCIS.

EB-2 National Interest Waiver

Certain foreign nationals may be eligible for permanent residency pursuant to the National Interest Waiver (NIW) provision of the Immigration and Nationality Act (INA) if they either: (1) are members of the profession holding an advanced degree (or their equivalent); or (2) possess exceptional ability in the arts, sciences, or business, and they will “substantially benefit the national economy, cultural or educational interests, or welfare of the United States.” In most cases, such workers are also required to obtain a Labor Certification from the Department of Labor (DOL) prior to filing their petition with USCIS; however, the INA gives USCIS the authority to waive the Labor Certification requirement, in their discretion, if it is determined that it would be in the national interest to do so. More so, NIW cases allow for so-called “self-petitioners” (meaning that no job offer or employee sponsor is required), which is uncommon in U.S. immigration law. These features therefore make this category extremely desirable as it allows for both skipping the tedious and pedantic Labor Certification process and for petitioning without the sponsorship of an employer (something that is ideal for an entrepreneur seeking to start their own business in the United States).

When a foreign national’s work will be deemed to be in the “national interest” is subject to a three-part test, which includes: (1) the foreign national’s proposed endeavor has both substantial merit and national importance; (2) the foreign national is well positioned to advance the proposed endeavor; and (3) that, on balance, it would be beneficial to the United States to waive the requirements of a job offer and thus a labor certification.  This new standard—which was announced in early 2017—is less demanding than the old standard, but will still undoubtedly provide challenges to immigrant entrepreneurs seeking to utilize the category.

Conclusion

As seen above, there are several solid options for immigrant entrepreneurs seeking to enter the United States in order to start, manage, and run their own businesses. However, petitioning the United States government for any sort of immigration benefit is a complex process which requires competent counsel, proper planning and close oversight.

 

© Copyright 2018 Murtha Cullina
This post was written by Michael J. Bonsignore of Murtha Cullina.
Read more on Immigration Matters at the NLR’s Immigration Page.

Administration Clarifies and Limits Searches of Electronic Devices at Border

On January 4, 2018, U.S. Customs and Border Protection (CBP) issued Directive 3340-049A, governing border searches of electronic devices. CBP’s new directive updates and provides several improvements over the agency’s initial directive, published nine years ago, regarding the policies and procedures for border searches of electronic devices conducted in furtherance of CBP’s mission. CBP has implemented several key changes that aim to provide travelers with more clarity and protections regarding the procedures for electronic device searches; however, the numerous exceptions included in the new directive may, in practice, allow CBP to bypass some of these protections. Ultimately, the new directive serves as an upgrade over CBP’s initial directive, provides additional protection for travelers by incorporating a reasonable suspicion standard for most “advanced” searches, and provides specific procedures to be followed when travelers assert the attorney–client privilege or the attorney work product doctrine.

Under the new directive, CBP assures travelers that it will protect the rights of individuals against unreasonable search and seizure and ensure privacy protections while accomplishing its enforcement mission. However, it is important to note that travelers carrying electronic devices are guaranteed few protections limiting CBP’s searches and seizures of their devices. CBP regards such searches as integral to protecting border security and aiding in the detection of evidence relating to terrorism and other national security matters, human and cash smuggling, contraband, and child pornography.

New Directive Applies Only to CBP

Importantly, the directive applies only to CBP. Thus, any border search conducted by agents of U.S. Immigration and Customs Enforcement (ICE) or Homeland Security Investigations (HSI) is not subject to the protections of the directive. ICE and HSI are not included in the directive and those agencies have not issued a new policy or directive for their searches.

What Is an Electronic Device?

The directive governs searches of electronic devices conducted by CBP at the physical border, functional equivalent of the border, or the extended border. An “electronic device” is defined as “any device that may contain information in an electronic or digital form, such as computers, tablets, disks, drives, tapes, mobile phones and other communication devices, cameras, music and other media players.”

What Content May Be Searched?

Pursuant to the directive, border searches of electronic devices are limited to “only the information that is resident upon the device,” and officers are prohibited from intentionally using the device to access information that is solely stored remotely. To avoid access to information stored remotely, officers will either request that the traveler disable network connectivity or, where warranted by national security, law enforcement, officer safety, or other operational considerations, the officers themselves will disable network connectivity.

New Distinction Drawn Between Types of Searches

The new directive makes a distinction between “basic” searches, which may be conducted without suspicion, and “advanced” searches, which require officers to have reasonable suspicion of activity in violation of the laws enforced or administered by CBP. The directive also carves out an exception to allow for advanced searches without reasonable suspicion when national security concerns exist. For example, a national security concern may arise in scenarios involving a national security-related lookout in combination with the presence of an individual on a government-operated and government-vetted terrorist watch list. During a basic search, an officer may examine the electronic device and review and analyze information encountered at the border. During an advanced search, an officer connects external equipment to an electronic device not merely to gain access to the device, but to review, copy, and/or analyze its contents.

Protections for the Attorney–Client Privilege and Attorney Work Product Doctrine

The new directive includes detailed procedures for searches that may involve the attorney–client privilege or the attorney work product doctrine. However, CPB’s detailed procedures are not applicable to other sensitive material, such as medical records or business confidential information. When an individual asserts the attorney–client privilege or the attorney work product doctrine, the CBP officer will seek clarification—in writing, if practicable—from the individual asserting privilege to assist CBP in identifying the privileged information. While the directive instructs officers to handle medical records and other work-related or business confidential information in accordance with applicable federal laws and CBP policies, it does not require officers to follow the detailed procedures set forth for searches involving attorney–client privilege or the attorney work-product doctrine, and no new protections have been added for these other types of sensitive material.

Travelers Explicitly Required to Provide Passcodes and Encrypted Information

With regard to passcodes or encrypted information, travelers are obligated to present electronic devices and their contents in a condition that allows inspection. If an officer is unable to complete an inspection because the device is protected by passcode or encryption, the officer may detain the device pending a determination as to its admissibility, exclusion, or other disposition. Additional consequences, such as travel delay or denial of entry may potentially arise if a traveler refuses to provide passcodes or encrypted information.

Detention of Electronic Devices

Searches may take place on-site or off-site and are to be completed as expeditiously as possible. Unless extenuating circumstances exist, the detention of devices ordinarily should not exceed five days.

Impact on Employers

Despite the improved guidance and clarified limits in the new CBP policy, employers may still be at some risk when employees carry electronic devices containing company data during international travel. While the CBP directive contains specific procedures for border searches when confronted with sensitive business confidential information, the directive does not preclude a border search of business confidential information. Thus, employers may wish to consider whether it is feasible to restrict employees from carrying electronic devices containing sensitive company data during international travel. When practicable, some employers already seek to determine whether they can provide “clean” electronic devices to be used by employees during international travel so that the devices do not retain company data. These practices may be effective for many employers since border searches of electronic devices are limited to data resident on the device, and CBP is not permitted to connect devices to external networks.

 

© 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

New Jersey Amends Its Law Against Discrimination to Provide Protections to Nursing Mothers

On January 8, 2018, former New Jersey Governor Chris Christie signed new legislation (the “Amendment”) amending the New Jersey Law Against Discrimination (“NJLAD”) to add breastfeeding as a protected class under the law. The Amendment, which takes effect immediately, makes it unlawful to discriminate or retaliate against an employee that the employer knows, or should know, is either breastfeeding or expressing milk for her infant child.

The Amendment also requires employers to provide reasonable accommodations to nursing women, unless it would result in an undue hardship to the employer, and specifically requires employers to provide:

  1. Reasonable break time each day for the employee to express breast milk for her child; and
  2. A suitable location with privacy, other than a toilet stall, in close proximity to the work area for the employee to express breast milk for her child.

To determine whether an accommodation would provide an undue hardship, the NJLAD provides that the following factors should be considered:

  • the overall size of the employer’s business with respect to the number of employees, number and type of facilities, and size of budget;
  • the type of the employer’s operations, including the composition and structure of the employer’s workforce;
  • the nature and cost of the accommodation needed, taking into consideration the availability of tax credits, tax deductions, and outside funding; and
  • the extent to which the accommodation would involve waiver of an essential requirement of a job as opposed to a tangential or non-business necessity requirement.

The Amendment also provides that breastfeeding employees are entitled to paid or unpaid leave as a reasonable accommodation, in the same manner as “provided to other employees not affected by pregnancy or breastfeeding but similar in their ability or inability to work.” While the Amendment does not provide an express right to leave, it requires employers to treat such a leave request as they would any other request for leave.

While many New Jersey employers have already been subject to similar requirements to provide breaks and private spaces for nursing mothers to express breast milk in accordance with the Patient Protection and Affordable Care Act’s 2010 Amendment to the federal Fair Labor Standards Act (“FLSA”), the key differences between the breast feeding protections in the FLSA and in the NJLAD are:

  1. Which employees are covered? The FLSA’s protections apply only to “non-exempt” workers (i.e., those workers entitled to overtime pay), while the NJLAD’s protections apply to all New Jersey employees.
  2. Which employers are covered? Small businesses (fewer than 50 employees) may not be covered by the FLSA break-time-for-nursing-mothers provision if they can demonstrate that compliance with the provision would impose an undue hardship. The NJLAD contains a similar “undue hardship” exception, but does not limit the exception to small businesses.
  3. How long must employers accommodate nursing mothers? Protections under the FLSA apply up until one year after the birth of the child, while the NJLAD’s protections do not provide a time limit and apply while the mother is “breast feeding her infant child.” The NJLAD does not define “infant child.”

What should employers do?

New Jersey employers should review their procedures and practices to ensure compliance with the Amendment by:

  1. Reviewing anti-discrimination and reasonable accommodation policies to ensure compliance with the law;
  2. Training supervisors and managers on how to handle accommodation requests related to breastfeeding;
  3. Providing an employee who is breastfeeding with reasonable break times and a suitable private location, other than a toilet stall, in close proximity to the work area to express breast milk for her child.

In addition, employers should consult with counsel before denying an employee an accommodation related to breastfeeding to determine whether an “undue hardship” may be established.

 

©2018 Epstein Becker & Green, P.C.
More Labor and Employment News on the Labor and Employment Practice Group page.

Biosimilar Market Developments Continue Apace in 2018

It has been a few months since we reported on Federal Court wranglings with the Biologics Price Competition and Innovation Act, or BPCIA, which created the nation’s abbreviated marketing pathway for biosimilar products.

After the Supreme Court issued its first ruling on the BPCIA in June 2017 (see our prior post here), it sent the dispute between Amgen and Sandoz back to the Federal Circuit Court of Appeals to resolve the question of whether Amgen’s claims asserted under California law, including a claim of unfair competition, were preempted under the BPCIA.

In December 2017, a three-judge panel of the Federal Circuit issued its opinion, ruling that the BPCIA preempts Amgen’s state law claims under both the doctrines of “field preemption” and “conflict preemption.” The court’s takeaway message to the biologics industry and the lawyers representing them was clear:

[These] state law claims conflict with the BPCIA and intrude upon a field, biosimilar patent litigation, that Congress reserved for the federal government.

Our colleagues from Mintz Levin’s Intellectual Property Practice have provided further analysis of the Federal Circuit’s BPCIA preemption decision on our sister blog, Global IP Matters, which you can read here.

In addition, 2017 closed out with several important biosimilar regulatory developments, as we noted in our FDA Year in Review Post here.  Critically, after we wrote that post, the Agency approved one more abbreviated biologic license application (aBLA) for a biosimilar of the reference product Remicade® (infliximab) – which is the third approved infliximab biosimilar. It also gave FDA a total of five approved aBLA applications for calendar year 2017, an improvement over 2016 when three aBLAs were approved. This increased pace of approvals reflects all stakeholders’ greater understanding of the aBLA pathway as we receive more guidance and experience in the area; many more applications in the review pipeline and many more biosimilars in development; and the reduced need for the Agency to convene advisory committees for each new application as it starts to receive second and third aBLAs for the same reference product. (FDA’s general policy has been to bring only the first biosimilar of each reference product to an advisory committee for review and feedback.)

An updated version of our Status of Biosimilars Chart reflecting recent developments is available here.

Finally, we are still watching for details from Commissioner Gottlieb and the Agency about the “significant policy announcement being planned for the beginning of 2018 on the topic of increasing competition in markets for biological products” – as we referred to it in our FDA Year in Review Post back in December 2017. Most recently, the Agency published its 2018 Strategic Policy Roadmap on January 11, 2018, which hints at this policy announcement again but doesn’t provide much more information. The Roadmap states that one action the Agency intends to take towards increasing competition and getting drug prices down for consumers is to “launch a comprehensive program to promote the development and adoption of safe, high-quality biosimilar drugs as part of a new Biosimilar Innovation Plan (BIP).”

©1994-2018 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.