Category: Uncategorized

Sex Education for Minors?

As we previously reported, this past fall, Governor Jerry Brown signed into law AB 2338, which includes a provision requiring minors 14-17 years of age and their parents/guardians to receive sexual harassment prevention training prior to the issuance of an entertainment work permit by the California Labor Commissioner.  Earlier this week, the Department of Labor Standards Enforcement (“DLSE”) published its guidance regarding AB 2338 on its website.  The DLSE’s very brief guidance does answer some questions regarding the new law, yet leaves some unanswered.

First, the DLSE’s guidance notes that applicants for 10-day temporary entertainment work permits are exempt from the training requirement.

Second, it provides two options for 13-year-old minors who will reach their 14th birthday during the period of a six-month entertainment work permit: (1) apply for a permit which will expire on the minor’s 14th birthday; or (2) the Labor Commissioner will issue permits to minors at least 13 years and six months of age, who provide satisfactory proof of sexual harassment prevention training as an age-eligible minor.

Third, the DLSE’s guidance specifies that the sexual harassment prevention training must at a minimum include the components specified in the Department of Fair Employment and Housing’s form, DFEH Form 185.  This form includes general information regarding sexual harassment as well as employers’ responsibilities related to sexual harassment. The training must be administered by a third-party vendor and may be provided electronically or on site, in a language the participants understand.

Although AB 2338 went into effect on January 1, 2019, the DLSE has stated that, due to the “unavailability of third-party vendors and applicable materials at this time,” the Labor Commissioner will not enforce the new law until June 30, 2019.  Even following the DLSE’s guidance, questions remain regarding the new law, such as the required length of the trainings and which vendors will be deemed acceptable.  MSK will continue to monitor this area and will provide an update via its blog upon any further developments.

 

© 2019 Mitchell Silberberg & Knupp LLP.

Six Flags Raises Red Flags: Illinois Supreme Court Weighs In On BIPA

On January 25, the Illinois Supreme Court held that a person can seek liquidated damages based on a technical violation of the Illinois Biometric Information Privacy Act (BIPA), even if that person has suffered no actual injury as a result of the violation. Rosenbach v. Six Flags Entertainment Corp. No. 123186 (Ill. Jan. 25, 2019) presents operational and legal issues for companies that collect fingerprints, facial scans, or other images that may be considered biometric information.

As we have previously addressed, BIPA requires Illinois businesses that collect biometric information from employees and consumers to, among other things, adopt written policies, notify individuals, and obtain written releases. A handful of other states impose similar requirements, but the Illinois BIPA is unique because it provides individuals whose data has been collected with a private right of action for violations of the statute.

Now, the Illinois Supreme Court has held that even technical violations may be actionable.  BIPA requires that businesses use a “reasonable standard of care” when storing, transmitting, or protecting biometric data, so as to protect the privacy of the person who provides the data. The rules are detailed. Among other things, BIPA requires businesses collecting or storing biometric data to do the following:

  • establish a written policy with a retention schedule and guidelines for permanently destroying biometric identifiers and biometric information;
  • notify individuals in writing that the information is being collected or stored and the purpose and length of time for which the biometric identifier will be collected, stored, and used;
  • obtain a written release from the individual; and
  • not disclose biometric information to a third party without the individual’s consent.

The Illinois Supreme Court has now held that a plaintiff may be entitled to up to $5,000 in liquidated damages if a company violates any of these requirements, even without proof of actual damages.

In Rosenbach, the plaintiff’s son’s fingerprint was scanned so that he could use his fingerprint to enter the Six Flags theme park under his season pass. Neither the plaintiff nor her son signed a written release or were given written notice as required by BIPA. The plaintiff did not allege that she or her son suffered a specific injury but claimed that if she had known that Six Flags collected biometric data, she would not have purchased a pass for her son. The plaintiff brought a class action on behalf of all similarly situated theme park customers and sued for maximum damages ($5,000 per violation) under BIPA. The Illinois appellate court held that plaintiff could not maintain a BIPA action because technical violations did not render a party “aggrieved,” a key element of a BIPA claim.

In a unanimous decision, the Illinois Supreme Court disagreed. The court held that “an individual need not allege some actual injury or adverse effect, beyond violation of his or her rights under the Act, in order to qualify as an ‘aggrieved’ person and be entitled to seek liquidated damages and injunctive relief pursuant to the Act.” Even more pointedly, the court held that when a private entity fails to comply with BIPA’s requirements regarding the collection, retention, disclosure, and destruction of a person’s biometric identifiers or biometric information, that violation alone – in the absence of any actual pecuniary or other injury—constitutes an invasion, impairment, or denial of the person’s statutory rights.

This decision – along with the 200 class actions already filed – shows how important it is for vendors and companies using fingerprint timeclocks or other technologies that may collect biometric information to be aware of BIPA’s requirements.

 

© 2019 Schiff Hardin LLP

PFAS — What’s all the Fuss?

Recently, per- and polyfluoroalkyl substances (PFAS) have been the subject of much publicity, major ongoing litigation over alleged personal injury and property damage, and statutory and regulatory action. In Massachusetts and New Hampshire, contamination incidents, lawsuits, and concerns over drinking water impacts have led to proposals for adoption of extremely low (parts per trillion) drinking water guidelines or enforceable standards. Nationally, although there are drinking water “advisories,” the U.S. Environmental Protection Agency (EPA) is considering whether to start rulemaking to identify PFAS as “hazardous substances” under the federal Superfund law, and whether to adopt enforceable maximum contaminant levels as national drinking water standards.

What’s all the fuss? Although manufacturers stopped making two of the most well-known PFAS (PFOA and PFOS) over a decade ago, PFAS are a category of substances that includes hundreds of compounds, and a number of them appear to have toxic effects. PFAS had – and continue to have – a variety of uses in a multitude of products, and therefore have been manufactured or used (and sometimes released) at a large number of facilities. Commercial products have included, among others, cookware, food packaging, personal care products, and stain resistant chemicals for apparel and carpets. Industrial and commercial uses included photo imaging, metal plating, semiconductor coatings, firefighting aqueous film-forming foam, car wash solutions, and rubber and plastics. As a result, PFAS are present in the environment, and have been detected in certain drinking water systems. Further, PFAS are still being manufactured and used, but discharge of PFAS in air and water typically have not been regulated. PFAS also are highly mobile and highly persistent in the environment, and, therefore, will be present for scores of years.

Although the toxicological risks for many PFAS have not yet been determined with confidence, PFOA and PFOS have been tested fairly extensively. Manufacturers point out that not all PFAS have the same chemical structures and toxicity. Nevertheless, the Conservation Law Foundation and other environmental advocates are petitioning for regulation of the entire class.

Because PFAS haven’t yet fallen under most federal regulatory schemes, many states have been “filling the gap” with guidance and regulatory action. In Maine, PFAS are already the subject of guidance and regulations by the Maine Department of Environmental Protection (DEP). The most recent DEP Remedial Action Guidelines (RAGs, 2018) for PFOA, PFOS, and PFBS issued by Maine include:

  • Soil RAGs as low as 0.0095 ppm
  • Groundwater residential use RAG as low as 0.40 ppb
  • Fish tissue guidelines for recreational anglers as low as 0.052 ppm

And under DEP Chapter 418, Screening Levels for Beneficial Use have been set for certain PFAS as low as 0.0025 ppm.

It is clear there will be more regulation and legislation at federal and state levels. Further, litigation has commenced in a number of states (including Maine) for perceived or real damages from PFAS contamination under negligence and other tort theories.

What to do? Depending on where you sit, here are a few actions to consider.

  • If you are unsure whether you use PFAS, a limited review of safety data sheets may identify PFAS chemicals.
  • Determine if you stored, used, or currently use PFAS, and consider the potential toxicity of the specific compounds and potential impact of potential regulations.
  • If you stored or used PFAS in the past, consider whether there were potential releases or residuals that could pose health risks or liability risks.
  • If you are considering purchasing a business or real property, consider whether PFAS may have been used or released on site, and the potential risk and liability issues. Note that because PFAS are not federal “hazardous substances” they are not within the scope of the standard Phase I Environmental Site Assessment.
  • If you generate or ship wastes that may contain PFAS, consider voluntary testing and the possibility that testing may soon be requested or required.
  • If you use groundwater as drinking water or for production use, consider whether PFAS may be present from historic or recent uses.
  • Keep posted on national and state regulatory and legislative developments.
©2019 Pierce Atwood LLP. All rights reserved.
This post was written by Kenneth F. Gray and Thomas R. Doyle of Pierce Atwood LLP.

A Momentary Victory for the ACA: Federal Judge Issues a Nationwide Injunction against Trump Administration’s Contraceptive Coverage Carve Outs

On January 14, 2019, US District Judge Wendy Beetlestone in the US District Court for the Eastern District of Pennsylvania issued a nationwide preliminary injunction blocking the Trump administration’s carveouts to the Affordable Care Act’s (ACA) contraceptive coverage mandate. One day prior, US District Judge Haywood Gilliam in the US District Court for the Northern District of California issued a more limited injunction blocking the same carve outs from taking effect in 13 states plus the District of Columbia.

On October 6, 2017, the Trump administration issued rules that are the subject of these two decisions. The rules would have allowed employers to raise religious and moral objections to avoid the ACA’s requirement that contraceptive coverage be provided without cost sharing under their group health plans. Under the ACA, certain contraceptive products and services are included in the list of preventive services that must be covered by most group health plans without cost sharing. The available exemptions to this rule were limited.

Judge Beetlestone reasoned that the loss of contraceptive coverage would have resulted in “significant” and “proprietary harm” to the states by causing increased use of state-funded contraceptive services, along with increased costs associated with unintended pregnancies. Without the preliminary injunction, the Trump administration’s rules would have gone into effect on January 14, 2019. The preliminary injunction does not permanently block the rules, but rather it stops the rules from going into effect while legal challenges are being pursued. Judge Beetlestone indicated that she is likely to invalidate the rules, stating that the US Departments of Health and Human Services, Labor and Treasury exceeded the scope of their authority under the ACA by issuing the carve outs.

Charnae Supplee, a law clerk in the Firm’s Washington, DC office, also contributed to this post. 

 

© 2019 McDermott Will & Emery
This post was written by Jacob Mattinson Judith Wethall and Charnae Supplee of McDermott Will & Emery.

Emerging Technologies Update

Our present era is one characterized by rapid technological change, marked by an influx of advancements aimed at enhancing productivity, reducing labor costs, and providing companies with previously unforeseen efficiencies and insights. These emerging technologies—a broad collection of hardware and software that includes artificial intelligence (AI), autonomous vehicles (AVs), biotechnology, robotics, and unmanned aerial systems (drones)—are being incorporated into everyday operations by seemingly every industry and sector.

A number of emerging technologies are finding particular value in the energy, natural resources, and transportation spaces.  A brief survey of these sectors reveals that companies are incorporating emerging technologies in a number of novel ways, including:

  • Use of drones to detect leaks along pipelines and to survey the structural integrity of offshore rigs;
  • Integration of machine learning-empowered connected devices by electric, gas, and water utilities to better serve communities by identifying ways to be more efficient with respect to how resources are managed;
  • Application of predictive analytics for refinery/gas plant optimization to mitigate un-programmed plant shutdowns, improve yields, and enhance safety awareness;
  • Incorporation of machine learning and computer vision into AV systems which have the capability to significantly improve road safety, reduce traffic fatalities, and improve vehicle efficiency;
  • Adoption of machine learning and data analytics by oil and gas companies into planning processes for drilling by hydraulic fracturing; and
  • Utilization of autonomous delivery systems—including aerial and sidewalk drones—in an effort to significantly reduce the cost of deliveries and environmental impacts over the “last mile.”

While these and other technologies show great promise, they also create a host of new challenges for governments, companies, and individuals.  In particular, emerging technologies could usher in an era of massive disruption that dramatically alters and upsets traditional notions of consumer safety and privacy, national security, job security, and environmental quality.  Federal and state regulators and legislators are already starting to tackle the challenges arising from emerging technologies—with mixed results. These actions risk generating unintended consequences that could stifle innovation and/or forestall the incorporation of emerging technologies into various industry operations.

This inaugural VNF Emerging Technology Update is intended to identify recent executive and legislative branch developments in the emerging technology space that may impact the deployment of these technologies, which in turn could impact client operations. If you have a question about these or any other developments in the emerging technology space, please contact the authors of this alert.

Recent Emerging Tech Developments

DOT Announces New Measures to Facilitate Drone Deployment

On January 14, 2019, Secretary of Transportation, Elaine Chao, announced several significant regulatory developments that should—in time—provide drone companies and operators with more operational flexibility.

First, Secretary Chao announced that the Federal Aviation Administration (FAA) had unveiled a proposed rule entitled, “Operation of Small Unmanned Aircraft Systems over People.” Among other things, the proposed rule would allow a small drone to “pass[] over any part of any person who is not directly participating in the operation and who is not located under a covered structure or inside a stationary vehicle”—provided that the drone meets certain operational constraints related to drone weight, design, and risk of injury to people.  The proposed rule would also permit drones to operate at night provided that (i) the drone is equipped with an anti-collision light that is visible for at least three statute miles, and (ii) the operator has completed relevant knowledge training and testing.

While the proposed rule is a good first step in facilitating further innovation in small drone use cases, it is unlikely that the rule would have any immediate impact because it is contingent on the FAA implementing remote identification and tracking regulations, which the FAA is expected to promulgate in proposed form later this year.  Moreover, remote ID and tracking rules are necessary to stymie nefarious and nuisance operations that could target critical systems and infrastructure, including events similar to those that occurred at London’s Gatwick and Heathrow airports late in 2018 and early in 2019, and at Newark International Airport on January 22, 2019. Thus, while the proposed rule is a welcome step toward facilitating drone innovation, regulators still have a lot of work to do before companies (and consumers) realize the potential benefits of commercial drones.

In addition to the proposed rule, the FAA also announced an advanced notice of proposed rulemaking (ANPR) seeking comments on the “Safe and Secure Operations of Small Unmanned Aircraft Systems.” The ANPR recognizes the potential national security threat that drones pose to critical infrastructure, acknowledging that it is continually assessing the ability of the Part 107 regulations to address these concerns.  In addition, the ANPR notes that the FAA is working to develop a process to allow certain fixed-site facility owners to petition the agency to prohibit or restrict drone operations in close proximity to, e.g., critical infrastructure sites. The ANPR further recognizes public safety and national security concerns arising from loss of control of a drone. The agency seeks comment on the need to promulgate regulations establishing design requirements (such as redundancy) for systems critical to flight safety.

It is important to note that the current government shutdown has impacted the publication of these regulatory actions in the Federal Register. Therefore, the FAA is not yet accepting public comment on these actions. The FAA has not indicated when it will publish these actions in the Federal Register, but simply says both will be published “at a later date.”

FCC Proposed Rule on Unlicensed Use of 6 GHz Band

On December 17, 2018, the Federal Communications Commission (FCC) published a proposed rule to expand unlicensed use of the 5.925-7.125 GHz band (6 GHz band). Specifically, the FCC would allow unlicensed access points to operate on the 5.925-6.425 GHz and 6.525-6.875 GHz sub-bands only on frequencies determined by an automated frequency control (AFC) system. For the 6.425-6.525 GHz and 6.875-7.125 GHz sub-bands, the FCC would not mandate an AFC system and would permit unlicensed access points to operate at lower transmitted power.

The FCC’s press release on the proposed rule notes that “[u]nlicensed devices that employ Wi-Fi and other unlicensed standards have become indispensable for providing low-cost wireless connectivity in countless products used by American consumers.” The proposed rule represents one element of the FCC’s broader objective to facilitate and ensure that adequate spectrum exists to accommodate the proliferation of connected devices in the internet of things (IoT).

While the FCC asserted its commitment to “protecting the incumbent licensed services that operate in this spectrum,” the FCC’s proposed action does raise the possibility of conflict with electric, gas, and water utilities and other critical infrastructure systems, which have long relied on the 6 GHz band for their communications networks. Some worry that the FCC’s action could unleash a flood of new unlicensed users on the spectrum, which could create radio frequency interference that compromises both reliability and emergency response capabilities.

Comments on the proposed rule are due by February 15, 2019.

BIS Contemplating Export Controls for Certain Emerging Technologies

On November 19, 2018, the Bureau of Industry and Security (BIS)—an agency within the Department of Commerce—published an ANPR seeking public comment on criteria for identifying emerging technologies that are essential to U.S. national security. The BIS ANPR comes at a time of heightened scrutiny over global technology transfers. The past year alone has been dominated by headlines of (i) potential national security concerns related to the import of Chinese telecommunications technologies; (ii) potential supply chain attacks on U.S. technology manufacturers; and (iii) escalating trade tensions between the United States and China precipitated at least in part by U.S. objections over Chinese theft of intellectual property.

It is this third risk that BIS’s ANPR is attempting to redress. With the help of public comments received over the course their comment period (which closed on January 10, 2019) BIS will evaluate potential national security risks that may arise from the export of emerging technologies.  The agency has indicated that it will likely promulgate a proposed rule to amend the Commerce Control List (CCL) to include new Export Control Classification Numbers (ECCNs) for certain emerging technologies.

While there is certainly a need to address the economic, national security, and political implications of technology transfers—and the deleterious impacts of industrial espionage—some of the most prominent technology companies and technology industry advocacy groups argue that BIS’s action will do little to mitigate potential national security risks and may actually do more to harm U.S. emerging technology companies, because any prohibition on technology exports will apply to companies operating within the United States. Consequently, sophisticated external actors will still be able to engage in industrial espionage, thereby extracting potentially sensitive technologies outside of officially-sanctioned processes, allowing certain emerging technologies to end up in jurisdictions outside of the United States or its allies without U.S. companies being able to control the dissemination of those technologies.

Given the potential negative impacts of BIS’s contemplated regulatory action—as well as the fact that BIS issued the ANPR immediately before the year-end holiday season—many companies petitioned the agency for an extension of the original 30-day comment period. While BIS did extend the comment period an additional three weeks, the compressed comment period undoubtedly prevented some companies and individuals from offering more detailed insights.  Given the potential economic and security impacts of the ANPR, companies may wish to engage with the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) as an alternative or parallel strategy to ensure that the Administration is aware and understands the potential implications on U.S. companies.

Senators Warner and Rubio Introduce Bill to Establish the Office of Critical Technologies and Security

On January 4, 2019, Senators Mark Warner (D-VA) and Marco Rubio (R-FL) introduced S.29, which would establish an “Office of Critical Technologies and Security” within the White House. Recognizing threat of industrial espionage, forced technology transfers, and supply chain vulnerabilities, the bipartisan bill is intended to ensure that technology transfer decisions occur within a broader policy context—a “whole of government technology strategy”—that weighs relevant economic, geopolitical and national security concerns in a way different from the existing BIS regulatory process.

As of January 22, the Senate has taken no further action on the bill.

 

© 2019 Van Ness Feldman LLP
This post was written by R. Scott Nuzum and Eric C. Wagner of Van Ness Feldman LLP.

Google Fined $57 Million in First Major Enforcement of GDPR Against a US-based Company

On January 21, 2019, Google was fined nearly $57 million (approximately 50 million euros) by France’s Data Protection Authority, CNIL, for an alleged violation of the General Data Protection Regulation (GDPR).[1] CNIL found Google violated the GDPR based on a lack of transparency, inadequate information, and lack of valid consent regarding ad personalization. This fine is the largest imposed under the GDPR since it went into effect in May 2018 and the first to be imposed on a U.S.-based company.

CNIL began investigating Google’s practices based on complaints received from two GDPR consumer privacy rights organizations alleging Google did not have a valid legal basis to process the personal data of the users of its services, particularly for Google’s personalized advertisement purposes. The first of the complaints was filed on May 25, 2018, the effective date of the GDPR.

Following its investigation, CNIL found the general structure of the information required to be disclosed by Google relating to its processing of users’ information was “excessively disseminated across several documents.” CNIL stated the relevant information pertaining to privacy rights was only available after several steps, which sometimes required up to five or six actions. Moreover, CNIL indicated users were not able to fully understand the extent of the processing operations carried out by Google because the operations were described in a “too generic and vague manner.” Additionally, the regulator determined information regarding the retention period was not provided for some data collected by Google.

Google’s process for obtaining user consent to data collection for advertisement personalization was also alleged to be problematic under the GDPR. CNIL stated Google users’ consent was not considered to be sufficiently informed due to the information on processing operations for advertisement being spread across several documents. The consent obtained by Google was not deemed to be specific to any individual Google service, and CNIL determined it was impossible for the user to be aware of the extent of the data processed and combined.

Finally, CNIL determined the user consent captured by Google was not “specific” or “unambiguous” as these terms are defined by the GDPR. By way of example, CNIL noted that Google’s users were asked to click the boxes «I agree to Google’s Terms of Service» and «I agree to the processing of my information as described above and further explained in the Privacy Policy» in order to create the account. As a result, the user was required to give consent, in full, for all processing operations purposes carried out by Google based on this consent, rather than for distinct purposes, as required under the GDPR. Additionally, the CNIL commented Google’s checkbox used to capture user consent relating to ad personalization was “pre-clicked.” The GDPR requires consent to be “unambiguous,” with clear affirmative action from the user, which according to the CNIL, required clicking an unclicked box.

This fine may be appealed by Google, which indicated it remained committed to meeting the “high standards of transparency and control” expected by its users and to complying with the consent requirements of the GDPR. Google indicated it would study the decision to determine next steps. Given Google is the first U.S.-based company against whom a DPA has attempted GDPR enforcement, in combination with the size of the fine imposed, it will be interesting to watch how Google responds.

The GDPR enforcement action against Google should be seen as a message to all U.S.-based organizations that collect the data of citizens of the European Union. Companies should review their privacy policies, practices, and end-user agreements to ensure they are compliant with the consent requirements of the GDPR.

© 2019 Dinsmore & Shohl LLP. All rights reserved.
This post was written by Matthew S. Arend and Jared M. Bruce of Dinsmore & Shohl LLP.

Sixth Circuit Compels Arbitration in Putative Class Action between Shell Oil and Ohio Landowners

Plaintiff entered into a lease agreement with Defendants (Shell Oil entities) governing extraction of oil and gas from his five-acre property located in Guernsey County, Ohio. The agreement provided a signing bonus to Plaintiff of $5,000 per acre, contingent upon Shell’s timely verification that he possessed good title to the property. The lease also contained a broad arbitration clause providing that any dispute under the lease was to be resolved by binding arbitration. Plaintiff brought suit, individually and on behalf of other landowners having similar contracts with Shell, for breach of contract after Shell allegedly failed to pay the signing bonus. The District Court for the Southern District of Ohio subsequently denied Shell’s motion to compel arbitration, and Shell appealed.

The Sixth Circuit reversed and remanded, compelling arbitration and a directing the district court to decide whether the lease allowed for class-wide arbitration. The panel found that the district court failed to address the threshold issue of who decides arbitrability and further reasoned that Plaintiff did not attack the enforceability of the “specific arbitration clause” but rather “argued that much of the contract, which happens to include the arbitration clause, is unenforceable.” In so finding, the panel determined that the arbitration clause was triggered at signing, leading to the applicability of the severability doctrine and the determination that an arbitrator must consider the issue first. As to the class-wide arbitration question, the Panel reasoned that because the parties did not identify a provision in the contract that clearly and unmistakably gave the arbitrator the power to decide the matter, and in light of “the importance of this issue to the case, given that the class could include hundreds of Ohio landowners,” that question would be for the district court to decide upon remand. In a dissenting opinion, Judge Moore opined that the district court was the proper body to decide whether the dispute should be arbitrated in light of the lease agreement’s two distinct triggering events – the signing of the agreement and the payment of the bonus. As such, Judge Moore opined that only after payment of the bonus would the arbitration clause apply.

Rogers v. Swepi LP, No. 18-3229 (6th Cir. Dec. 10, 2018).

 

©2011-2019 Carlton Fields Jorden Burt, P.A.
Read more about Oil and Gas lease agreements on the National Law Review’s Energy and Environment Page.

New Jersey Announces Minimum Wage Increase

Governor Murphy, Senate President Sweeney and Assembly Speaker Coughlin have just announced their plan to increase New Jersey’s minimum wage to $15 per hour. Currently, minimum wage in New Jersey is $8.85 per hour.

Under the proposed plan, minimum wage would increase to $10/hour on July 1, 2019. Minimum wage would then increase by a dollar per year as follows:

  • 1/1/2020 – $11
  • 1/1/2021 – $12
  • 1/1/2022 – $13
  • 1/1/2023 – $14
  • 1/1/2024 – $15

Note that this increase will be delayed for some workers. Seasonal workers and employees at businesses with five or few workers won’t be eligible for the $15 minimum wage until 1/1/26. Agricultural workers will also be subject to different rules. More details on the plan will certainly follow in the coming weeks.

 

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved
Read more news on minimum wage increases on the National Law Review’s Employment Law Page.

There’s a New Sheriff in Town: The Food and Drug Administration’s Move to Regulate CBD

Hemp has wide commercial application and appeal with a viable market for nearly every part of the plant, from the seeds, to the roots, to the flower.

And with the passage of the Agriculture Improvement Act of 2018 (the “AIA”), the American hemp industry is poised for exponential growth.  Cannabidiol or “CBD” represents one of the fastest growing – and, perhaps, the most controversial and commercially profitable – segments of the hemp industry today.

There is no shortage of claims about CBD’s helpful properties, with commonplace industry acceptance that the cannabinoid can be used to, among other things, alleviate inflammation and anxiety.  CBD has been, and it continues to be, incorporated into a wide variety of consumer products, including lozenges, honey, and even an FDA-approved prescription medicine.  But, as the legal and regulatory landscape surrounding hemp and CBD continues to develop, there remains uncertainty – at least for now – about the legality of using hemp-derived CBD to produce food, cosmetic, and dietary supplement products.

For nearly 50 years, the Drug Enforcement Agency (“DEA”) was primarily responsible for law enforcement efforts relating to hemp and its derivatives, including CBD.  The DEA’s enforcement authority was derived from hemp’s classification as “marihuana” and CBD’s classification as a Schedule I substance under the Controlled Substances Act of 1972 (“CSA”).  That changed on December 20, 2018, when President Trump signed the AIA into law.  Among other things, the AIA broadened the definition of “hemp” on the Federal level, and it stripped both hemp and hemp-derived CBD from the CSA itself.  As a result, the DEA is no longer the primary enforcement agency with respect to hemp and hemp-derived CBD.

On the same day that President Trump signed the AIA into law, the Food and Drug Administration (“FDA”) released a press release on the matter.  The FDA statement is not binding or controlling, but it does forecast the FDA’s clear intention to take an active role in regulation and enforcement for hemp and CBD products going forward.

By issuing that press release, the FDA has publicly stated that:

  • It will continue to enforce the law (including the Federal Food, Drug, and Cosmetic Act, or “FD&C Act”) in an effort to protect patients, the public, and to promote the agency’s overall public health role.
  • Products containing cannabis or cannabis-derived compounds (like CBD) will be subject to the same authorities and requirements as other non-cannabis FDA regulated products.
  • Hemp or hemp-derived CBD products that are “marketed with a claim of therapeutic benefit, or with any other disease claim” must be approved by the FDA before being introduced to interstate commerce.
  • Hemp or hemp-derived CBD products marketed “for use in the diagnosis, cure, mitigation, treatment, or prevention of diseases” are considered drugs and must be approved by the FDA before they are marketed for sale in the U.S.
  • It is “unlawful under the FD&C Act to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.”

The FDA has the authority to introduce regulation that would allow the use of CBD in foods and dietary supplements, but that has not happened yet, and it remains to be seen whether (or when) that will happen.

For now, questions remain.  Will CBD ultimately be regulated entirely as a drug?  Will it be treated as an additive not subject to FDA approval?  Or perhaps the specific application of CBD to a product will drive how it is treated?  We do not yet know the answers to these questions.  But we do know, for now, that the FDA sits in the regulatory driver’s seat for the CBD industry moving forward.

 

© 2019 Ward and Smith, P.A.. All Rights Reserved.
This post was written by Tyler J. Russell and Allen N. Trask, III of Ward and Smith PA.

What’s the Lowdown on the Shutdown?

The partial government shutdown continues. The shutdown has captured the attention of Washington politicians and the media, not to mention the hundreds of thousands of federal employees who are currently furloughed or working without pay.

For employers, the shutdown has some important implications. While the Department of Labor (DOL) and the National Labor Relations Board (NLRB) are fully funded through October 2019, the Equal Employment Opportunity Commission (EEOC) is not.

As a result of the lack of funding, the EEOC is closed until further notice.

WHAT DOES THAT MEAN FOR EMPLOYERS? A FEW THINGS:

  • The EEOC will not begin processing new employment discrimination cases until it reopens.
    However, the EEOC has been clear that the shutdown will not extend the statute of limitations for employees to file charges (300 days for Wisconsin employees). Employees who are close to the filing deadline are being encouraged to file charges by mail while the EEOC’s online portal remains closed to the public. Presumably, charges postmarked within the statute of limitations will be considered timely; however, this extra step may discourage some employees from filing claims.
  • Deadlines assigned to employers cannot be ignored on account of the shutdown.
    For example, a notice of charge dated December 21, 2018 with a position statement due date of January 21, 2019 cannot be ignored. Just as employees remain subject to the statute of limitations for their claims, so too are employers required to continue to meet their deadlines. If an extension is required, you should contact legal counsel as soon as possible. Generally, EEOC staff will not be able to respond to communications.
  • Pending EEOC charges will be suspended during the shutdown.
    This includes claims currently under investigation and those in the EEOC’s mediation program. Likewise, all EEOC litigation will be suspended except in cases where a continuance has not been granted.
  • The government shutdown does not affect state law discrimination claims.
    The Wisconsin Equal Rights Division (ERD) continues to accept discrimination claims, including those normally cross-filed with the EEOC. Employers must continue to respond to communications from the ERD.

Past experience suggests that if and when the EEOC reopens for business, there will be a significant backlog of cases to sort through. Employers should therefore expect the EEOC’s actions and communications to lag in 2019 as the agency works to get caught up on processing, investigating, and resolving cases.

 

Copyright © 2019 Godfrey & Kahn S.C.
This post was written by M. Scott LeBlanc of Godfrey & Kahn S.C.

Read more labor and employment news on the National Law Review’s labor and employment type of law page.