The Department of Energy Resources (DOER) has finished the required Solar Massachusetts Renewable Target (SMART) Program 400MW review and emergency rulemaking and published its final regulations. Several revisions and adjustments have been made to the final regulations, including an extension to the COVID-19 extension for new applications received through December 31, 2020.
Revisions have been made to previously published land-use exceptions. Projects that meet the below criteria will now be assessed under the former land-use regulations:
Have applied for the Interconnection Service Agreement (ISA) 135 business days prior to April 15, 2020, or have obtained a fully executed ISA by October 15, 2020; and
Have obtained a sufficient interest in real estate or other contractual rights to construct the Solar Tariff Generation Unit at the location specified in the ISA as of April 15, 2020.
Additionally, the DOER distinguished eligible land use between projects qualifying for capacity as part of the original 1600MW versus projects qualifying under the new 1600MW. Projects qualifying under the original 1600MW will be eligible for the SMART Program even if located on land designated as Critical Natural Landscape, while projects qualifying under the new 1600MW will be ineligible if the project is sited in a Priority Habitat, Core Habitat, or Critical Natural Landscape.
The final regulations also allow for single-axis trackers to be eligible for the Tracker Adder, and behind-the-meter systems to receive Alternative On-Bill Credits.
The DOER also made modifications to the Statement of Qualification Reservation Period Guideline. In addition to continuing the COVID-19 extension for new applications, the DOER has done the following:
Eliminated the requirement that projects obtaining an indefinite extension, pending the authorization to interconnect, must submit a claim within 10 business days of receiving the authorization to interconnect;
Granted eligible Public Entity Off-taker Adder Solar Tariff Generation Units an initial Reservation Period of 18 months;
Clarified that projects qualified as Community Shared Solar that do not submit a claim with the CSS Adder will have their base compensation rate decreased to the value in the lowest available Capacity Block, but will not be at risk of losing their Statement of Qualification outright: and
Established a process by which DOER will queue project applications if there is a rush of applications submitted following the issuance of ISAs by a Distribution Company upon the completion of an ASO study.
Several other Guidelines related to the SMART Program are still being revised, and the DOER is expected to release these updates in the coming weeks. Publication of the regulations is just the beginning phase for resuming the SMART Program. Changes to the regulations that affect the tariff will now need to be implemented into each Electric Distribution Companies’ tariffs and undergo administrative review of the Department of Public Utilities.
After several weeks in lockdown and thousands of business closures in an attempt to control the spread of the novel coronavirus, businesses are finally reopening their doors. Given the high transmission of COVID-19, businesses should consider their risks of legal liability to visitors on their property – customers, employees and others – in the event of COVID-19 exposure at their premises. But the fear of civil liability remains a hindering problem. These claims will most commonly be pursued under the legal theory of negligence and plaintiffs may seeking financial compensation for their injuries and medical treatment related to COVID-19. Plaintiff’s lawyers in these cases will focus on the operations and procedures in place during the reopening. Some businesses are taking extraordinary measures to protect customers, while others are doing the bare minimum. Businesses need to know how to be in compliance with best safety practices to prevent and defend against claims related to an alleged failure to protect customers from COVID-19 exposures.
Immunity for Businesses for COVID-19 Exposure?
A large number of states, including Massachusetts, have enacted laws to shield health care workers, health care facilities and volunteer organizations treating COVID-19 patients from negligence claims subject to certain exceptions. However, the immunity does not extend to cover damages caused by gross negligence or recklessness. It is important to note that these states have not provided similar immunity to other businesses, nor have they limited liability in cases involving gross negligence for COVID-19 related claims. There have been discussions of additional legislation to protect businesses in these cases, but this has yet to happen.
Tort Claims and Premises Liability Law in Massachusetts
Personal injury claims typically stem from negligent acts, where a party had a duty of care, failed to reasonably care for that individual, and that failure to care caused the individual harm or injury. A ”duty of care” exists when its reasonably foreseeable that some act or omission would cause some type of knowable harm, and thus taking reasonable action to ensure safety. The breach of that duty is the act or omission that causes the harm. The breach of duty must cause some damages. Damages are monetary compensation for the victim’s injuries and losses if liability is found.
Premises liability law, a subset of personal injury law, similarly holds that property owners owe a duty of reasonable care to visitors on their premises in Massachusetts, so as to not create or allow unsafe or hazardous conditions to exist on their premises that could cause injury or harm to patrons and guests. If a hazardous condition exists that could reasonably cause harm, and the property owner fails to remove it or warn of it, this could ultimately result in liability.
The duty of care is stricter for business owners, as they invite persons onto their property to purchase goods or services. The level of care owed depends upon the type of visitor on the property. Massachusetts has two types of lawfully present visitors: 1) licensees- individuals presenting financial gain for the property owner like patrons, diners, shoppers; and 2) invitees- those who are not providing any financial gain to the property owner like guests and friends at a social gathering. The property owner owes its visitors a duty of care, that is to keep the property reasonably safe. In this context, the property owner is well aware of the risks associated with COVID-19, the nature of the disease and how it is transmitted. If it did not take reasonable steps to prevent the transmission of the virus to its licensees and invitees, and the claimant can prove the business’ failure to exercise reasonable care was a “substantial contributing factor” in causing the claimant’s injury, they may be entitled to damages, which can include among other things, medical expenses, economic damages, and even emotional distress.
Breach of Duty
There is an abundance of guidance available to businesses on the virus, transmission, preventative measures. Whether a business “breached” their duty of care will focus on what the business did to determine if taking action (or taking no action) was reasonable or not, given the state of knowledge on the virus. Thus, claimants would need to point to what steps the businesses took to protect its licensees and invitees, and whether there were additional procedures that could have been implemented to prevent the transmission, and whether those additional actions were reasonable in light of what was known about the virus. Intentional ignorance is not a defense – property owners have a duty to investigate known or potential hazards, including COVID-19.
Causation
Claimants in tort claims have the burden of proving causation. This usually means proving that the breach of duty was a “substantial contributing factor” in causing the claimant’s injury. In COVID-19 cases, the claimant will ultimately need to prove that the virus was contracted at that business as opposed to another source, which may be extremely difficult to do. Asymptomatic spread of COVID-19 is one of many challenges to proving the initial source of exposure. While some claimants will rely on contact tracing, that alone does not rule out alternative sources of COVID-19 exposure – any other place the person visited (markets, homes, their workplace), and exposure to family members and friends.
Notably, a large number of states are enacting legislation applicable to workers compensation claims related to COVID-19. This legislation establishes a rebuttable presumption that an employee who tests positive for COVID-19 contracted it in the course of employment, although some are limited to essential workers. A “rebuttable presumption” means that the burden of disproving causation is thrust upon the employer. While there are no similar rebuttable presumptions for personal injury and premise liability claimants at this time, it is an open question as to whether these presumptions can be used affirmatively in tort lawsuits, particularly in a situation where a worker brings COVID-19 into the home and sickens a family member or housemate.
Mitigating Liability
If businesses can show that safety protocols were followed, this evidence can be used to defend these types of claims. The Centers for Disease Control and Prevention (CDC) has set guidelines that should be followed as best practices to avoid COVID-19 liability claims. There is an abundance of state and local guidance on social distancing, use of masks and other measures to prevent the spread of the virus. With the vast amount of information available to the public on the risks of the virus and preventative measures, claimants will argue that businesses have enough information to safely operate Crafty plaintiff’s lawyers will likely seek out and find guidance that specifically supports their clients case. Business owners are advised to do the same for their respective industries, whether it be restaurants, offices or youth sports leagues.
Defenses to Consider in Defending COVID 19 Liability Claims
Statute of Limitations
The statute of limitations for in Massachusetts governing personal injury and premises liability cases places a time limit of three years within the date of the incident for filing the lawsuit. Lawsuits filed after the statute of limitations period may be dismissed as “time-barred.” Other states have similar statutes, although the specific timeframe may vary.
Modified Comparative Negligence Law
Some states, including Massachusetts, use a modified comparative negligence rule in personal injury cases, allowing plaintiffs to recover only if the defendant’s share of the blame was equal to or greater than their own. There are only a few exceptions allowing plaintiffs to recover if they were more than 51% at fault. Another important factor of this rule to consider is that if plaintiffs are found to be at fault, their damages are reduced by their allocated share of the blame. Did the visitor where a mask? Did they stay 6 feet apart from other individuals? Did they wash their hands and sanitize frequently? Were they placing their hands on their mouth and nose? These facts and circumstances are critical factors to consider when shifting the blame to the claimant.
Assumption of Risk Abolished in Massachusetts
Some jurisdictions allow a defendant in a personal injury action to raise an affirmative defense of assumption of risk, but that is abolished in Massachusetts as a defense in personal injury cases. In jurisdictions where this defense is allowed, instead of denying the allegations, defendants can assert that a plaintiff was aware of the risk when engaging in the activity or conduct, fully had knowledge of the consequences and willingly disregarded the risks or assumed the risks. Therefore, the defendant cannot be at fault for negligence and this serves as a complete bar to recovery.
Liability Waivers
Did a plaintiff sign a written liability waiver acknowledging and accepting risks? Enforceability of liability waivers as well as the exceptions to the enforceability of releases vary from state to state. While this only shows licensees and invitees were made aware of the risk, using such waivers in these COVID 19 claims is not a slam dunk defense.
Conclusion
We encourage businesses to consider these liability risks when resuming operations and to follow comprehensive procedures and CDC guidelines to mitigate the risks and protect licensees and invitees from the spread of the virus at these establishments. Our office can help businesses develop a plan specific to their business to mitigate the risks of liability from emerging claims related to COVID 19 and provide guidance and advocacy for defending such claims.
The proposed rule does not change the substantive criteria on which such claims will be evaluated and rather is primarily intended to (1) strengthen the FTC’s enforcement mechanism by making it easier for the FTC to assess civil penalties against those making unlawful MUSA claims and (2) give marketers more regulatory certainty. Under the proposed rule, a MUSA claim may, as before, only be made where (1) the final processing or assembly occurs in the USA, (2) all significant processing that goes in the product occurs in the USA, and (3) all or virtually all of the ingredients or components of the product are made and sourced in the U.S. While the proposed rule would apply to a broad range of product labels, it would also apply to MUSA claims found outside of the product label such as mail order catalogs and mail order promotional materials defined to include “any materials, used in the direct sale or direct offering for sale of any product or service, that are disseminated in print or by electronic means, and that solicit the purchase of such product or service by mail, telephone, electronic mail, or some other method without examining the actual product purchased.” The proposed rule would not apply to qualified MUSA claims.
Comments to the proposed rule are due by September 14, 2020.
The United States has been rocked by the COVID-19 pandemic in innumerable ways and it has had profound and ongoing impacts on workers. One of the most vexing problems arising from COVID-19 has been protecting workers who object to employers that are failing to implement meaningful safety precautions to protect their workers during the pandemic. As just one of many examples, an Amazon employee was fired after he opposed the company’s failure to meaningfully protect warehouse employees who had potentially been exposed to the coronavirus. This article will examine our failures in addressing this problem through meaningful federal action and highlight instances where local legislators have passed laws to protect workers who find themselves facing this predicament.
The Deficiencies of Federal Law to Protect Workers During the Coronavirus Crisis
The primary federal law requiring a safe working environment is the Occupational Safety and Health Act (“OSH Act”). Section 11(c) of the OSH Act prohibits employers from discharging or discriminating against an employee because the employee exercised any rights under the Act, including the right to raise health or safety complaints. 29 U.S.C. § 660(c). The OSH Act theoretically protects an employee who refuses to work based on unsafe working conditions, although the requirements for a protected work refusal are stringent.
Unfortunately, the OSH Act does not effectively protect workers in general, much less in the face of a burgeoning pandemic. The Act does not have a private right of action, so employees who suffer retaliation for reporting unsafe working conditions cannot sue in court. Instead, Section 11(c) allows employees to file a complaint with the Occupational Safety and Health Administration (“OSHA”) and request that OSHA protect them. Thus, government officials ultimately decide what to do with the OSH Act complaint; if they fail to protect an employee, that employee has no other recourse under the statute. In addition, the OSH Act has a 30-day statute of limitations—the shortest of any federal anti-retaliation statute. Finally, the strict requirements governing what constitutes a protected refusal to work will leave many employees in the cold. OSHA officials have acknowledged the weakness of the OSH Act protections. In 2010, then-Deputy Assistant Secretary for Occupational Safety and Health, Jordan Barab, testified before Congress that Section 11(c)’s lack of a private right of action and statutory right of appeal were “[n]otable weaknesses” in the law. Mr. Barab also lamented the OSH Act’s “inadequate time for employees to file complaints.”
Several states have their own version of the OSH Act, protecting employees who raise concerns about workplace health and safety. Like the federal OSH Act, however, many of these state laws do not contain private rights of action. See, e.g., D.C. Code § 32-1117 (no private right of action); Md. Code, Labor & Empl. § 5-604 (same); but see Va. Code § 40.1-51.2:2 (providing private right of action and a 60-day limitations period for filing a complaint).
Proposed Legislation to Protect Whistleblowers
The Coronavirus Oversight and Recovery Ethics Act (“CORE Act”) put in place meaningful protections against retaliation for individuals who report waste, fraud, and abuse related to government funds that were distributed to combat the COVID-19 pandemic. Like other recent whistleblower protection legislation, it is primarily enforced through the Department of Labor but permits whistleblowers to “kick out” their claims into federal court. Further, language in the bill nullifies the effectiveness of pre-dispute mandatory arbitration provisions with respect to claims asserted under the law. In many ways, it is a model piece of whistleblower protection legislation.
One significant omission from the CORE Act, however, is language amending the OSH Act or otherwise granting meaningful protections to whistleblowers who report workplace health and safety concerns related to COVID-19. Thus, nothing in the bill purports to protect an individual who refuses to come to work, or opposes her employer’s practices, because her employer has failed to take sufficient steps to mitigate COVID-19-related risk to employee health. In most of the country, employees in that situation are left with the OSH Act as their primary recourse for protection against retaliation.
Given the clear deficiencies in the OSH Act’s protections of whistleblowers concerned about workplace safety, whistleblower advocacy organizations like the Project on Government Oversight (“POGO”) have pushed for Congress to pass legislation that would, among other things, “prohibit retaliation against essential workers making disclosures related to worker or public health and safety during the pandemic.” On June 15, 2020, in response to calls from groups like POGO, Senator Kamala Harris and Representatives Jackie Speier and Jamie Raskin introduced the COVID-19 Whistleblower Protection Actto expand the whistleblower protections of the CORE Act.
Protecting Whistleblowers at the Local Level
Given the lack of federal action to address this problem, some municipalities have passed legislation specifically designed to protect employees who report COVID-19-related workplace safety concerns. For example, Mayor Kenney of Philadelphia recently signed into law Bill No. 200328, which requires employers to “comply with all aspects of public health orders addressing safe workplace practices to mitigate risks” related to COVID-19. The bill further states that “[n]o employer shall take any adverse employment or other action against an employee” who refuses to work in conditions that do not comply with public safety guidelines, and that “no employer shall take any adverse employment or other action against any employee for making a protected disclosure.” A “protected disclosure” is defined as a “good faith communication” disclosing information “that may evidence a violation of a public health order that may significantly threaten the health or safety of employees or the public, if the disclosure or intention to disclose was made for the purpose of remedying such violation.” The legislation includes a private right of action and permits awards to successful litigants including reinstatement, back pay, compensatory damages, and liquidated damages “of $100 to $1000 on behalf of the City for each day in which a violation occurs.”
In late May, the City of Chicago enacted a bill that contained slightly narrower but still powerful protections. In the bill, the City of Chicago prohibited employers from retaliating against employees for complying with public health orders relating to COVID-19 issued by the City or the State or for following COVID-19-related quarantine instructions from a treating health care provider. The protections extend to employees who are caring for an individual subject to such a quarantine. The bill includes a remarkable damages provision entitling successful claimants to liquidated damages “equal to three times the full amount of wages that would have been owed had the retaliatory action not taken place.”
These actions by municipalities are meaningful and offer critical protections to citizens living in those cities. At the same time, the need for this local legislation highlights the glaring absence of meaningful protections for workers in the rest of the country. It seems that every week we hear more horror stories about conditions in which workers are forced to work during this pandemic, lest they risk losing their jobs in the midst of a devastating economic downturn. The weaknesses in the OSH Act and the absence of even proposed federal legislation that would fill this critical gap in protection is a moral failure.
The Foreign Corrupt Practices Act (“FCPA”) prohibits companies from bribing foreign officials in an effort to obtain or retain business, and it requires that companies maintain adequate books, records, and internal controls to prevent unlawful payments.
The FCPA was passed in response to an increase in global corruption costs.
Implementing an effective FCPA compliance program can benefit companies financially and socially, and it can help companies seize opportunities for business expansion.
In drafted and implemented appropriately, an FCPA compliance program will: serve as an invaluable tool against corruption, promote ethical conduct within the company, reduce the societal costs of corruption, and foster business expansion domestically and globally.
Company leaders should consider hiring experienced legal counsel to provide advice and representation regarding FCPA compliance.
What is the Foreign Corrupt Practices Act?
Enacted in 1977, the Foreign Corrupt Practices Act (“FCPA”) is a federal law that prohibits bribery of foreign officials in an effort to obtain or retain business. It also requires companies to maintain adequate books, records, and internal controls in their accounting practices to prevent and detect unlawful transactions.
Congress passed the FCPA in response to growing concerns about corruption in the global economy. The FCPA includes provisions for both civil and criminal enforcement; and, over the past several decades, FCPA enforcement proceedings have resulted in billions of dollars in penalties, disgorgement orders, and other sanctions issued against companies accused of engaging in corrupt transactions with government entities.
What are the Risks of FCPA Non-Compliance?
The U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) are the primary agencies tasked with enforcing the FCPA. These agencies take allegations of FCPA violations very seriously, motivated in large part by the damage that bribery and corruption of foreign officials can cause to the interests of the United States. Prosecutions under the FCPA have increased in recent years, with both companies and individuals being targeted.
Due to the risk of federal prosecution, companies that do business with foreign entities must implement compliance programs that are specifically designed to prevent, detect and allow for appropriate response to transactions that may run afoul of the FCPA. In addition to helping to prevent and remedy FCPA violations, adopting a robust compliance program also demonstrates intent to follow the law and can create a positive view of your company in the eyes of federal authorities.
“Implementing an effective FCPA compliance program serves a number of important purposes. Not only can companies mitigate the risk of their employees engaging in corrupt practices, but they can also discourage corrupt conduct by other entities and demonstrate to federal authorities that they are committed to complying with the law.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.
If your company is targeted by the DOJ or SEC for a suspected FCPA violation, it will be important to engage federal defense counsel promptly. Having counsel available to represent your company during an FCPA investigation is crucial for protecting your company and its owners, executives, and personal against civil or criminal prosecution.
Why Should Companies Implement FCPA Compliance Programs?
Here are 10 of the most important reasons why companies that do business with foreign entities need to adopt comprehensive and custom-tailored FCPA compliance programs:
The FCPA is an invaluable tool in the federal government’s fight against foreign corruption.
The FCPA is a massive piece of legislation that is designed to allow the DOJ and SEC to effectively combat corruption and bribery involving foreign officials. Ultimately, enforcement of the FCPA is intended to eliminate the costs of foreign corruption to the United States.
An effective and robust FCPA compliance program promotes these objectives while also protecting companies and individuals against civil liability and criminal prosecution.
Anti-corruption laws like the FCPA promote ethical conduct.
Companies that have comprehensive policies against bribery and corruption send a strong message to other companies and foreign officials that they are committed to aiding in the federal government’s fight against corruption.
Foreign officials are less likely to ask for bribes from companies that promote an anti-corruption corporate environment through their compliance policies and procedures.
Compliance with anti-corruption laws promotes positive morale among company personnel who feel the pride of working for a company that is committed to transparency and ethical conduct.
The FCPA allows companies to develop strong internal controls and avoid a slippery slope toward an unethical culture.
Companies that regularly utilize bribes in their business operations are likely to eventually encounter multiple problems, both in the U.S. and abroad.
Once a foreign official knows that a company is willing to pay bribes, that foreign official will request larger bribe amounts. In order to continue business operations in the relevant jurisdiction, company personnel may continue to accept the foreign official’s terms and pay larger bribes.
If left unchecked, corrupt practices can become so prevalent that they create enormous liability exposure for the company.
Maintaining a focus on FCPA compliance allows companies to develop effective internal controls that promote efficiency in their business operations.
The FCPA reduces the societal costs of corruption.
Corruption increases costs to society. This includes political, social, economic, and governmental costs resulting from unethical business conduct.
By adopting and enforcing strong FCPA compliance programs, companies can help reduce these costs.
The FCPA reduces the internal business costs of corruption.
Corporate success depends on certainty, predictability, and accountability. An environment where corruption is rampant costs companies time and money, and it can lead to disruptions in the continuity of their business operations.
FCPA compliance instills predictability in investments, business transactions, and dealings with foreign officials.
Corruption and bribery create an unfair business environment.
Companies are more likely to be successful in an environment that emphasizes fair competition, and in which all competitors sell their products and services based on differentiation, pricing, and efficiency.
Corruption and bribery allow for unfair results in the marketplace. For instance, companies that utilize bribes can achieve increased sales and increased market share despite offering an inferior product at an uncompetitive price.
The penalties under the FCPA encourage compliance and accurate reporting.
The penalties imposed under the FCPA incentivize the disclosure and reporting of statutory violations. These penalties include fines, imprisonment, disgorgement, restitution, and debarment.
Whistleblowers can receive between 10% and 30% of amounts the federal government recovers in FCPA enforcement litigation, and this provides a strong incentive to report violations as well.
The risk of significant penalties is an important factor for companies to consider when deciding how much time, effort, and money to invest in constructing an FCPA compliance program.
Anti-corruption laws foster business expansion and stability both domestically and globally.
For companies that plan to expand domestically or internationally, success depends on the existence of a competitive environment in which companies compete fairly based on product differentiation, price, and other market factors.
Fair competition and growth opportunities are hampered when competitors can simply bribe their way to success. Therefore, FCPA enforcement is essential to maintaining fair competition.
DOJ and SEC investigations can severely disrupt efforts to maintain stability and predictability, and they can lead to significant financial and reputational harm.
Corruption leads to human rights abuses.
Companies that regularly utilize corruption and bribery to achieve their business goals often resort to other illegal practices as well. This includes forced labor and child labor.
These types of human rights abuses are commonplace in countries where corruption and bribery are widespread.
To reduce the risk of these human rights abuses, it is crucial for company personnel to be educated on the potentially disastrous consequences of corruption and bribery.
Developing a robust compliance policy is the best way to educate personnel, reduce the risks of corruption and bribery, and eliminate the human rights abuses associated with these risks.
The FCPA encourages open communication between companies and their legal counsel.
With regard to FCPA compliance, it is a legal counsel’s job to represent the best interests of the company and help the company foster an environment of ethical conduct. Achieving these objectives requires open and honest communication between the company and legal counsel.
Due to the severe sanctions imposed under the FCPA, companies are incentivized to hire counsel to advise them with regard to compliance and to adopt and implement effective FCPA compliance programs.
Effective FCPA Compliance Programs Help Companies Avoid Costs, Loss of Business Opportunities, and Federal Liability
Working with legal counsel to develop robust FCPA compliance policies and procedures can help prevent company personnel from offering bribes and engaging in other corrupt practices while also encouraging the internal disclosure of suspected violations. Failing to maintain adequate internal controls and foster a culture of compliance can be detrimental to a company’s operations, and FCPA violations can lead to civil or criminal prosecution at the federal level. As a result, all companies that do business with foreign entities would be well-advised to work with legal counsel to develop comprehensive FCPA compliance policies and procedures.
It’s been said that a bar association or law firm’s reputation is its largest uninsured asset – an asset that can be seriously damaged with an ineffective crisis response.
Traditional media leap on stories like those listed above. And with the presence today of social media platforms such as Facebook and Twitter, not to mention a 24/7 media environment, the reputation you’ve built up with years of good work can be shattered in an instant.
Today, your brand can face a significant reputational challenge in the time it takes to bang out a feverish 140-character tweet. When it comes to social media, in particular, law firm and bar leaders no longer have the luxury of gathering around a table to discuss strategy. There’s simply no time.
Effective Crisis Response Is More Than An Emergency Plan
Often, law firms and bar associations will dutifully create an operational crisis plan, but lack a concomitant crisis communications strategy. So, what should your organization do?
The heart of crisis communications planning focuses on preparing for the most significant, gut-wrenching threats – both operational and reputational – that might affect your firm. To identify those threats, a “Vulnerabilities Audit” with top management (managing partner, CEO, CIO, CFO, CMO, GC, H.R.) will enable your team to assess the risks the firm faces, both in terms of their likelihood and the severity of the consequences they might have on the firm’s reputation or operations. The second part of the plan focuses on how your organization will communicate about those threats.
Having a crisis communication plan is an excellent first step. But a plan is no good gathering dust on a shelf. Many organizations next do crisis/media training to make certain they have trained executives who understand the needs and demands of today’s media, enabling the firm to deliver its messages clearly and with credibility.
The most-prepared organizations also do tabletop drills to test the plan and put their staff through the rigors of real-time crisis simulation, thereby improving the chances of responding effectively when the real thing hits.
Organizations that want to stay ahead of the curve also keep a sharp ear to the rail with a comprehensive monitoring program that closely watches news content delivery platforms — print, broadcast, web, mobile and social. And many progressive organizations have third-party crisis counsel audit their current plan as it evolves, to make certain there are no chinks in their armor.
What’s The Payback?
From a reputational perspective, how your firm or bar association communicates during a crisis will likely be just as important as how the incident is managed operationally. Good planning and training will mean:
A more coordinated, consistent and authentic communications response.
Improved communications with internal and external key stakeholders.
Improved communications with legacy media and social media resulting in more accurate coverage.
Better coordination among crisis team members, less redundancy and reduced stress.
Enhanced ability to maintain normal operations while simultaneously managing the crisis event.
Reduced damage to the organization’s reputation, with the possibility it may even be enhanced.
Your response to a crisis event must be rapid, strategic and authentic. Especially in today’s media landscape, where news breaks first on social media, “managing the message” is a necessary skill set for law firm and bar association executives (and not necessarily one of the skill sets that got you into the C-Suite).
When your organization’s reputation is on the line, so is your bottom line. Strategic crisis management and crisis communications planning is your brand’s most effective insurance policy.
Slaughter began his career as a labor and employment attorney at Steptoe & Johnson (S&J) over 20 years ago, focusing his practice on litigation and counseling, including contract administration and labor negotiations. Slaughter was previously a managing member of S& J’s Huntington, West Virginia office.
“I am honored to be elected to this position by my partners. I look forward to carrying on our tradition of excellent client service and upholding the core values that have sustained Steptoe & Johnson for 107 years,” Slaughter said.
Brewer will remain with Steptoe & Johnson to assist with Slaughter’s transition and to provide project leadership.
Bill Purcell, FBT
Former Nashville Mayor Bill Purcell joined Frost Brown Todd (FBT) as a counsel in the firm’s Government Services practice group.
Purcell has practiced law in Nashville for over 30 years, serving as a courtroom advocate and CEO advisor for companies that work with municipalities and other governmental entities. In 2006, he received the John C. Tune award from the Nashville Bar Association for public service.
“I have had the same goal from the very start of my law practice and public life—to work with the smartest, most ethical people to solve challenging issues,” Purcell said. “From the first time I walked into the Frost Brown Todd offices, I knew I was home.”
Purcell was elected mayor of Nashville in 1999 and re-elected in 2003. During his tenure, he increased public education funding by 50 percent and built 26,000 affordable housing units.
“As we enter a time when our public and private sectors are challenged like never before, there could not be a better time to bring aboard someone with Bill’s talents,” said FBT Chairman Robert Sartin, who also is based in the firm’s Nashville office. “We are in this with our clients to win—Mayor Purcell is going to be a difference-maker for our clients.”’
Dino Hadzibegovic joined the Silicon Valley Office of Dickinson Wright as Of Counsel. Hadzibegovic’s practice focuses on trademark and patent litigation, due diligence and patent portfolio analysis. He has represented both plaintiffs and defendants in cases involving mobile platform architectures, networking, semiconductors, wireless technology and telecommunication standards.
Before joining Dickinson Wright, Hadzibegovic was the IP Counsel for JUUL Labs, where he carried out patent and trademark litigation in federal courts, international courts and the ITC.
Shanlon Wu and Julie Grohovsky joined Cohen Seglias Pallas Greenhall & Furman (Cohen Seglias) as partners in the firm’s Washington, D.C. office. Wu will lead the Cohen Seglias’ new White Collar Defense & Government Investigations Group. Grohovsky will lead the firm’s new False Claims Act & Whistleblower Group, where Wu will also practice. Both Wu and Grohovsky previously had their own firm, Wu Grohovsky.
“Shan and Julie are highly regarded for their knowledge and experience with white-collar defense, college student defense, as well as government investigations. Their practices are in line with our firm’s growth, and we are excited to build our Washington, D.C. footprint with them on board,” said Cohen Seglias Managing Partner George Pallas.
Wu is a former federal prosecutor, handling student defense and high profile white-collar matters involving companies and individuals facing prosecutions and investigations for health care fraud, defrauding the government and bribery allegations.
Grohovsky’s practice focuses on whistleblowers who bring cases under the qui tam provisions of the False Claims Act, as well as representing victims in civil and criminal cases and Title IX proceedings.
Grohovsky previously served as an attorney-advisor to the Office of the Inspector General for the Department of Justice, investigating fraud allegations, abuse, and waste in the department. She also served as an Assistant U.S. Attorney in the District of Columbia, training lawyers and support staff.
Peterman has over two decades of corporate restructuring, corporate transactional and structured finance experience. He previously served as a Senior Counsel, Finance Department at DLA Piper, advising on insurance-related securities transactions.
“Coming to Sugar Felsenthal has been the best move of my career,” Peterman said. “The energy with which my new partners take on clients’ issues is electric; their intellectual horsepower, tremendous, and the creative and practical lawyering I have already seen is among the best I’ve ever encountered.”
Law Firm Mergers, Accomplishments and Attorney Honors
Troutman Sanders and Pepper Hamilton became Troutman Pepper (Troutman Pepper Hamilton Sanders LLP) July 1. The new firm, which has 1,100 attorneys across 23 offices, is led by Steve Lewis, chair and CEO.
The merger was previously scheduled to take place April 1, but was postponed until July due to the coronavirus crisis. Both firms worked together to launch a COVID-19 resource center to provide detailed guidance on legal and business issues related to the pandemic.
“The combining of the two storied firms presented an opportunity to seamlessly merge different but complementary strengths of each,” Lewis said.
Pepper Hamilton focuses on life sciences, health care and private equity practices, while Troutman Sanders focuses on the insurance, finance, banking and energy industries.
The Grand Rapids Symphony Board of Directors named Varnum Partner Luis Avila as the chair of its executive committee. Avila has served on the board for the past three years. In addition to his position with the Grand Rapids Symphony Board of Directors, he serves on the boards of the Grand Rapids Art Museum, Grand Rapids Downtown Development Authority and the Michigan Hispanic Chamber of Commerce.
Avila represents clients in labor matters before Michigan Employment Relations Commission and National Labor Relations Board (NLRB), and advises employers on workplace matters and represents clients addressing matters involving federal and state laws. He also serves as the co-chair of Varnum’s Diversity and Inclusion Committee.
Unico Solar will develop and manage the portfolio of projects, which includes ground-mount, rooftop, and carport solar projects, providing clean electric to municipalities and property owners and educational institutions. Construction is expected to begin later this year.
Erin Clifford, partner at Clifford Law Offices, was unanimously elected to the WTTW/WFMT Board of Directors at its June 30 Board meeting. She joins her father, Robert A. Clifford, founder and senior partner at Clifford Law Offices, on the Board. This is just the latest in Clifford’s philanthropic activities, as she has an extensive resume of service in Chicago. Ms. Clifford serves as board chair of Lawyers Lend-A-Hand, which devotes resources and provides mentoring opportunities in disadvantaged Chicago communities through volunteer work and grant distributions. Erin Clifford also serves on the board of Friends of Prentice Board, working to provide excellent health care for women. Additionally, she supports ChiArts, the Chicago High School for the Arts, and many other civic activities in Chicago.
In celebration of the U.S. Supreme Court’s decision in Bostock v. Clayton County, legal technology company Casetext announced they are providing free access to the Compose brief automation for Title VII motions for the rest of the summer. Bostock v. Clayton County extended Title VII protections to lesbian, gay, bisexual, and transgender workers. Jake Heller, Casetext’s CEO and co-founder, indicated the company was thrilled at the court’s landmark decision on Title VII rights and its impact on the LGBTQIA community, saying,
As part of transforming the legal research space, we want to be part of making it the norm and not the exception for legal technology companies to become active participants in issues of social justice. It is our responsibility to make sure the technology we develop is in the hands of those who can use it to expand access to justice, particularly to marginalized and disadvantaged communities.
Casetext, whose technology uses machine learning on key elements of legal practice and powers CARA A.I. and Compose litigation automation, had previously made their legal research materials complimentary for attorneys working on pro bono representation to victims of excessive police force as well as protestors and journalists exercising First Amendment rights in response to the Black Lives Matter protests. (Attorneys interested in that service can request it here)
Casetext technology enables lawyers to focus on strategy and persuasion by removing the rote, repetitive elements of brief writing. Now, their technology is helping attorneys find justice for their clients. Heller says, “We hope that access to this technology will empower the attorneys who are on the ground in the fight against discrimination.”
In a several vein, Thomson Reuters announced last week a Civil Rights Legal Materials and News webpage available at civilrights.westlaw.com. The news page lives outside the paywall, and contains news coverage and Westlaw legal content, including statutes and case law, divided into three major categories: police conduct, unwarranted criminal prosecution and the right to protest. Additionally, the page offers ways to find Civil Rights attorneys.
Steele Compliance Solutions, a global leader in Ethics & Compliance Management, recently announced the worldwide launch of “Risk Intelligence Data,” an Enterprise Data as a Service (DaaS) platform delivering real-time, high-quality risk and compliance data. In the current climate, amidst a global COVID-19 pandemic and economic downturn, companies need access to data to properly vet partnerships while making decisions quickly. Christian Focacci, VP of Product Development at Steele Compliance solutions points to the need for better tech to help compliance professionals sort through the publicly identifiable data to identify risk. He says,
We are providing compliance teams with unmatched levels of data coverage through our proprietary datasets and continuous media monitoring. In particular, our business disruption data set will be critical in helping our clients proactively mitigate risk during the COVID-19 pandemic, by helping to identify customer and vendor risk through early detection of business deficiencies.
Steele’s Risk Intelligence Data delivers information on adverse media and negative news, watchlist and sanction lists, Politically Exposed Persons (PEP), OFAC related ownership and state owned entities, integrating information into third-party platforms to provide greater insights into risk information with fewer false positives.
That’s an overview of what’s happening in the legal industry. We’ll be back soon with more updates.
In late June 2020, the Department of Homeland Security (DHS) announced two regulatory changes intended to deprive asylum applicants of the ability to work lawfully in the United States while they await the adjudication of their asylum applications. By increasing the obstacles asylum seekers overcome to obtain an Employment Authorization Document, commonly known as a “work permit,” the new rules endanger the health and safety of asylum seekers and their families.
The first rule change, effective August 21, 2020, eliminates the requirement that USCIS must process employment authorization applications within 30 days of receiving the application. This rule change allows USCIS to adjudicate work permit applications for an indeterminate period of time, which will inevitably result in delays. The government claims this move will deter immigrants from filing “frivolous, fraudulent, or otherwise non-meritorious [asylum] claims.” But the rule change is more likely to force asylum seekers further into poverty and informal economies, thereby making it more difficult for them to meet their basic needs.
The second rule change, effective August 25, 2020, severely restricts eligibility for work permits while simultaneously increasing the waiting time for work permits. This too will have dire consequences for asylum seekers struggling to survive while their asylum applications remain pending. The new measures mandate the government to:
substantially delay the issuance of work permits by more than doubling the waiting period to apply from 150 days to 365 days;
bar asylum seekers from receiving a work permit if they attempt to enter the United States without inspection on or after August 25, 2020, unless they qualify for very limited exceptions;
deny employment authorization for asylum seekers who file their asylum application after the one-year filing deadline, unless granted an exception;
prohibit employment authorization for applicants who have been convicted of certain crimes or who are “believed” to have committed a serious non-political crime outside the United States;
deny employment authorization applications if the underlying asylum application has experienced “unresolved applicant-caused delays,” such as a request to amend or supplement the asylum application or if the application is being transferred to a different asylum office due to a change in the applicant’s address;
automatically terminate an asylum seeker’s work permit without provision for renewal if an immigration judge denies the asylum case and the applicant does not appeal to the Board of Immigration Appeals (BIA) within 30 days, or if the applicant does appeal but the BIA denies the appeal; and
limit the employment authorization validity period to a maximum of two years.
The effects of these new directives will be devastating. Currently, the inability to work lawfully for at least six months after seeking asylum often leaves applicants homeless, hungry, and without access to health care. Because federal law does not provide support such as income, housing, or food assistance to asylum applicants, dramatically increasing the waiting period for a work permit will exacerbate the conditions of poverty in which many asylum applicants find themselves. Without employment authorization, asylum seekers cannot obtain health insurance under the Affordable Care Act, and often cannot apply for a driver’s license or benefit from public assistance programs that offer safe housing and access to food. Federal law permits states to provide state-funded benefits to asylum seekers, but only about half of the states have extended benefits to that population. Even when states do provide some public benefits to asylum applicants, it is often only for children, the elderly, or asylum seekers with specific health conditions.
Given these consequences, pro bono attorneys representing asylum seekers who are eligible to apply for a new work permit or to renew an existing work permit now should consider filing employment authorization applications before August 21, when the first of these rules goes into effect.
In Trump v. Vance and Trump v. Mazars the Supreme Court issued opinions in two cases concerning the release of President Trump’s financial records. Reactions to the July 9th rulings have varied, with opinions differing on whether or not Trump’s reputation and presidency will be significantly impacted by what his financial records may reveal.
Below, we outline the details of each case and the reactions to the Supreme Court’s decisions.
Background Trump v. Vance
In Trump v. Vance, the court stated that Trump had no absolute right to block the Manhattan District attorney’s access to Trump’s financial records for the purposes of a grand jury investigation. The court held in a 7-2 decision that “Article II and the Supremacy Clause do not categorically preclude, or require a heightened standard for, the issuance of a state criminal subpoena to a sitting President.” The court’s opinion was written by Chief Justice John Roberts for the majority including Justices Ginsburg, Breyer, Sotomayor and Kagan with Justice Kavanaugh filing a concurring opinion joined by Justice Gorsuch, and Justice Thomas and Justice Alito writing separate dissenting opinions.
Trump v. Vance involves a state criminal grand jury subpoena not served on President Trump, but on two banks and an accounting firm that were custodians of the records. The subpoenaed records are for eight years of Trump’s personal and business tax returns and other banking documents in the years leading up to the 2016 election served on behalf of New York District Attorney Cyrus Vance., Jr. Vance’s investigation centered around payments made to two women — Karen McDougal and Stormy Daniels — who alleged they had affairs with Trump before he entered office.
The Supreme Court considered state criminal subpoenas could threaten “the independence and effectiveness” of the president as well as undermining the president’s leadership and reputation, weighing Trump’s circumstances against those in Clinton v. Jones, the 1997 case where President Bill Clinton sought to have a civil suit filed against him by Paula Corbin Jones dismissed on the grounds of presidential immunity, and that the case would be a distraction to his presidency.
Trump argued that the burden state criminal subpoenas would put on his presidency would be even greater than in Clinton because “criminal litigation poses unique burdens on the President’s time and will generate a considerable if not overwhelming degree of mental preoccupation” and would make him a target for harassment.
The Court addressed Trump’s argument, stating that they “rejected a nearly identical argument in Clinton, concluding that the risk posed by harassing civil litigation was not ‘serious’ because federal courts have the tools to deter and dismiss vexatious lawsuits. Harassing state criminal subpoenas could, under certain circumstances, threaten the independence or effectiveness of the Executive. But here again the law already seeks to protect against such abuse … Grand juries are prohibited from engaging in ‘arbitrary fishing expeditions’ or initiating investigations ‘out of malice or an intent to harass.’”
The Court also considered that Vance is a case addressing state law issues where Clinton was a case addressing federal law issues. Trump argued that the Supremacy Clause gives a sitting president absolute immunity from state criminal proceedings because compliance with subpoenas would impair his performance of his Article II functions. Arguing on behalf of the United States, the Solicitor General claimed state grand jury subpoenas should fulfill a higher need standard. In response, the Court ruled, “A state grand jury subpoena seeking a President’s private papers need not satisfy a heightened need standard … there has been no showing here that heightened protection against state subpoenas is necessary for the Executive to fulfill his Article II functions.”
Notably, the Supreme Court decision does not allow for public access to Trump’s tax returns; they will be part of a Grand Jury investigation, which is confidential. However, many took away the message that the majority’s decision–bolstered by Gorsuch and Kavanaugh, Trump appointees, who concurred–that the law applies to everyone.
Reactions to SCOTUS Decision from Jay Sekulow and Cyrus Vance, Jr.
Both Vance and Trump’s attorney Jay Sekulow expressed they were content with the Court’s ruling, albeit for different reasons.
“We are pleased that in the decisions issued today, the Supreme Court has temporarily blocked both Congress and New York prosecutors from obtaining the President’s financial records. We will now proceed to raise additional Constitutional and legal issues in the lower courts,” Sekulow tweeted.
We are pleased that in the decisions issued today, the Supreme Court has temporarily blocked both Congress and New York prosecutors from obtaining the President’s financial records. We will now proceed to raise additional Constitutional and legal issues in the lower courts.
“This is a tremendous victory for our nation’s system of justice and its founding principle that no one – not even a president – is above the law. Our investigation, which was delayed for almost a year by this lawsuit, will resume, guided as always by the grand jury’s solemn obligation to follow the law and the facts, wherever they may lead,” Vance said in a statement.
Other Reactions to the Supreme Court’s Trump v. Vance Ruling
Following the Supreme Court’s arguments in Vance, lawyers and legal scholars commented about what the decision could mean for the presidency.
In a C-SPAN interview with National Constitution Center President and CEO Jeffrey Rosen, Columbia Law School Professor Gillian Metzger spoke about the issue of burden on the president in Vance, “A lot of what is being shown in these cases is who bears the burden when. Clinton v. Jones said that first, you have to show the burden on the presidency…already the Solicitor General is trying to move us beyond where we had been in Clinton vs. Jones. Among the justices on the court, my sense is that they are really trying to figure out what the standards should be…I didn’t get the sense of a stark ideological divide on this.”
In agreement with seeing the ruling as a victory for the rule of law, David Cole, the ACLU National Legal Director said: “The Supreme Court today confirmed that the president is not above the law. The court ruled that President Trump must follow the law, like the rest of us. And that includes responding to subpoenas for his tax records.”
Harvard Law professor Laurence Tribe, a frequent Trump critic, highlighted the victory on Twitter, saying: “No absolute immunity from state and local grand jury subpoenas for Trump’s financial records to investigate his crimes as a private citizen. Being president doesn’t confer the kind of categorical shield Trump claimed.”
Of a practical matter, though, Mark Zaid, the Washington attorney who represented the whistleblower who set the stage for Trump’s impeachment proceedings, tweeted:
Even if Trump’s tax returns reveal fraud, I find it doubtful that this fact would finally be straw that broke his supporters’ back on election day.
But importance of ruling is that criminal investigation continues & will exist past expiration of Trump’s presidential immunity. https://t.co/dn3GIJ9CRj
“Even if Trump’s tax returns reveal fraud, I find it doubtful that this fact would finally be straw that broke his supporters’ back on election day. But importance of ruling is that criminal investigation continues & will exist past expiration of Trump’s presidential immunity.” (Should we embed the tweet?)
Background for the Supreme Court’s Ruling in Trump v. Mazars
The Supreme Court remanded back to the lower courts the second case, Trump v. Mazars in a 7-2 decision. The Mazars case involved three committees of the U. S. House of Representatives attempting to secure Trump’s financial documents, and the financial documents of his children and affiliated businesses for investigative purposes. Each of the committees sought overlapping sets of financial documents, supplying different justifications for the requests, explaining that the information would help guide legislative reform in areas ranging from money laundering and terrorism to foreign involvement in U. S. elections.
Additionally, the President in his personal capacity, along with his children and affiliated businesses—contested subpoenas issued by the House Financial Services and Intelligence Committees in the Southern District of New York. Trump and the other petitioners argued in the United States Court of Appeals for the Second Circuit that the subpoenas violated separation of powers. The President did not, however, argue that any of the requested records were protected by executive privilege. Justice Roberts wrote the majority opinion, with Thomas and Alito filing dissenting opinions.
In the opinion, Roberts sets out a list of items the lower courts need to consider involving Congress’s powers of investigation and subpoena, noting that previously these disagreements had been settled via arbitration, and not litigation. Additionally, Roberts summarizes the argument before the court, drawing on the Watergate era Senate Select Committee D. C. Circuit made by the President and the Solicitor General, saying the House must demonstrate the information sought is “demonstrably critical” to its legislative purpose did not apply here. Roberts, stated that this standard applies to Executive privilege, which, while crucial, does not extend to “nonprivileged, private information.” He writes: “We decline to transplant that protection root and branch to cases involving nonprivileged, private information, which by definition does not implicate sensitive Executive Branch deliberations.”
However, Roberts detailed that earlier legal analysis ignored the “significant separation of powers issues raised by congressional subpoenas” and that congressional subpoenas “for the President’s information unavoidably pit the political branches against one another.” With these constraints in mind, Roberts charged the lower court to consider the following in regards to congressional investigations and subpoenas:
Does the legislative purpose warrant the involvement of the President and his papers?
Is the subpoena appropriately narrow to accomplish the congressional objective?
Does the evidence requested by Congress in the subpoena further a valid legislative aim?
Is the burden on the president justified?
Reactions to Trump v. Mazars
Nikolas Bowie, an assistant Harvard Law Professor, turning to Robert’s analysis in the opinion on Congressional investigations opinion discussing Congressional investigations indicated the decision “introduces new limits on Congress’s power to obtain the information that it needs to legislate effectively on behalf of the American people . . . the Supreme Court authorized federal courts to block future subpoenas using a balancing test that weighs ‘the asserted legislative purpose’ of the subpoenas against amorphous burdens they might impose on the President.”
Additionally, Bowie points out, “it seems unlikely that the American people will see the information Congress requested until after the November election.”
Writing for the nonprofit public policy organization, The Brookings Institution, Richard Lempert, Eric Stein Distinguished University Professor of Law and Sociology Emeritus at the University of Michigan, concurs with Bowie’s point, writing that the Mazars decision may set a new standard for Congressional subpoenas moving forward:
“The genius of Robert’s opinion in Mazars is that while endorsing the longstanding precedent that congressional subpoenas must have a legislative purpose and without repudiating the notion that courts should not render judgments based on motives they impute to Congress, the opinion lays down principles which form a more or less objective test for determining whether material Congress seeks from a president is essential to a legislative task Congress is engaged in … Congress should be able to spell out in a subpoena why it needs the documents it seeks.”
Looking Ahead to What’s Next
There is a lot of information in these decisions to unpack, especially in relation to Congressional investigations and subpoenas. Additionally, questions remain on how the lower courts may interpret Roberts’ directive to examine “congressional legislative purpose and whether it rises to the step of involving the President’s documents” and how Congress will “assess the burdens imposed on the President by a subpoena.”
As the economic downturn from the COVID-19 pandemic continues to impact businesses throughout the United States, many employers face the prospect of implementing reductions in force or other employee terminations. Common questions include whether employers are legally obligated to pay severance, whether offering severance is advisable in the absence of a requirement to do so, and how much to offer. As explained below, severance payments are generally optional and can be used by employers to achieve a number of important goals, including risk mitigation and litigation avoidance.
Are Employers Required to Pay Severance?
As of this writing, no federal or state law obligates employers to pay severance to employees upon termination. Under the federal Worker Adjustment and Retraining Notification (“WARN”) Act and some state equivalents, employers may be required to pay terminated employees wages and benefits for a certain period if they fail to provide adequate notice to those employees as part of a qualifying mass layoff or plant closing. However, these payments under the WARN Act are penalties for non-compliance with the notice requirement rather than true severance and, moreover, can easily be avoided by providing the required notice.
New Jersey will become the first state in the nation to require employers to pay severance in certain circumstances when amendments to its WARN Act equivalent become effective. As part of a series of employer-unfriendly laws enacted in January 2020, New Jersey will require large employers—even those who comply with WARN notice requirements—to pay one week of severance for each full year of service to employees who are terminated as part of a qualifying mass layoff or plant closing. Employers who fail to provide adequate notice must pay an additional four weeks as a penalty. Fortunately, New Jersey has delayed the effective date of this new severance requirement to 90 days after termination of the COVID-19-related state of emergency.
Although no law currently requires the payment of severance, an employer may legally obligate itself to provide severance in a number of scenarios, including:
An employment agreement, especially for an executive, may guarantee some amount of severance in the event of a termination without cause.
A company policy, whether contained in an employee handbook or not, may provide for severance for employees who are terminated through no fault of their own.
A collective bargaining agreement may contain a severance guarantee.
Federal, state, and local anti-discrimination laws may compel an employer to offer severance to similarly situated employees in order to avoid a disparate treatment claim.
A practice of paying severance may be viewed under some circumstances to create a plan under the federal Employee Retirement Income Security Act (“ERISA”), with attendant requirements.
Should an Employer Offer Severance?
Absent a requirement or obligation to pay severance, an employer may nonetheless choose to offer severance in order to avoid claims or litigation, to obtain other benefits, or as a matter of goodwill. Indeed, whenever an employer offers severance, the offer should be conditioned upon the employee’s signing a general release of claims against the employer, affiliated entities, and associated personnel. This is true whether there is a specific concern about a claim or lawsuit—for example, where the terminated employee has previously complained about alleged discrimination—or not. Note that certain claims and rights cannot be released by an employee even in exchange for severance, such as claims for unemployment and worker’s compensation and the right to file a discrimination charge with a government enforcement agency.
Employers can also use severance to obtain strategic benefits from terminated employees beyond the release of claims, including confidentiality and restrictive covenants such as non-competition, non-solicitation, and non-disparagement provisions. In some situations, employers may wish to include other provisions as part of the exchange, such as a requirement that terminated employees cooperate with post-termination transition work or be available as a witness for pending or anticipated litigation.
How Much Severance to Offer?
Unless there is a preexisting requirement, policy, or plan to pay severance in a specified amount, the amount of severance to offer is entirely up to the employer. The amount should be sufficient “consideration” to support the employee’s release of valuable rights/ claims; however, there is no minimum threshold or magic number. Ultimately, the right amount of severance is a function of how much the employer is willing to pay and how little the terminated employee is willing to accept in exchange for signing an agreement containing a general release and any other provisions desired by the employer.
A good starting point—though by no means a requirement or standard—is one week of base salary for every year of service. Using a formula to determine severance amounts based on tenure or some other objective criteria helps insulate an employer from allegations of discrimination or unfairness, especially in the context of a group termination. Still, an employer is generally free to adjust the amount of severance to address individual situations.
Severance can be paid in a single lump sum or in installments over time, within certain limitations under the tax code. Employers should note that severance pay will likely be deemed to be W-2 wages by the IRS and state tax authorities, thus requiring employers to withhold employee payroll taxes and to pay employer payroll taxes. In addition, receipt of severance may impact a terminated employee’s eligibility for unemployment insurance benefits.
There are also a variety of other items that can supplement severance pay and may help achieve the employer’s ultimate goal—getting an employee to give a general release or agree to other conditions. Perhaps the most common is subsidized health insurance continuation coverage, in which the employer makes up the difference between the cost for the terminated employee under COBRA and the rate paid by active employees. Other, non-monetary supplements include job placement assistance, reference letters and more.
Takeaways for Employers
Severance is a powerful tool that employers can use to protect against lawsuits, legal fees, unfair competition, and a host of other undesirable situations. It is critical that any offer of severance, whether contained in an agreement/policy or made in conjunction with a termination, include, at a minimum, a requirement that the terminated employee provide a general release of claims. Finally, severance agreements and policies require the input of experienced legal counsel. There are many procedural requirements to ensure that releases and related agreements are fully enforceable, and these requirements continue to evolve.
Troutman Sanders and Pepper Hamilton became 
K&L Gates
