UAE Employment Law Update

2 February 2022 saw the introduction of a new UAE Labour Law in the form of UAE Federal Law No. 33 of 2021, Regulating Labour Relations (“New Law”), repealing the existing UAE Labour Law, UAE Federal Law No. 8 of 1980 as amended (“Previous Law”).  In addition to the introduction of the New Law, a set of companion Executive Regulations were issued on 3 February 2022, fleshing out certain provisions of the New Law.

The following is a non-exhaustive overview of the principal provisions of the New Law and the Executive Regulations.

Whilst the New Law makes several significant introductions, it equally maintains the status quo in others, as such what we see here is more evolution rather than revolution in terms of the regulation of employment relations governed by the New Law.

As with the Previous Law, the New Law does not apply to employees in the Dubai International Financial Centre or the Abu Dhabi Global Market which both have their own standalone employment laws and regulations.  In addition, employees of federal and local government agencies, members of the armed forces, police and security employees and domestic service workers (Article 3(2) of the New Law) are not subject to the New Law.

  1. Employment Arrangements

The New Law and Executive Regulations (Article 5) introduces the following models of work:

  1. Full time – working for a single employer full time;
  2. Part time – working for a single employer part time;
  3. Temporary work – work carried out for a specified time and for a specific task;
  4. Flexible work – work that allows changing work hours to take into account operational needs of an employer;
  5. Remote work – work that is performed outside of the workplace and which may be either full time or part time; and
  6. Job sharing – work is divided between one or more employees on a part time basis.

Furthermore, the Executive Regulations provide that additional employment arrangements can be introduced based on labour market demands.

  1. Work Permits

The Executive Regulations (Article 6) stipulates the types of work permits available and the corresponding processes for obtaining, renewing and cancelling the same are as set in Article 7 of the Executive Regulations:

  1. Work permits for recruitment for employee’s outside of the UAE;
  2. Transfer work permit allowing a non-UAE national’s employment to be transferred between establishments registered with the Ministry of Human Resources and Emiratisation (“MOHRE”/“Ministry”);
  3. Relative work permit allowing a person who is on the residence visa of a family member to work for an employer registered with the MOHRE;
  4. A temporary work permit for where an employer is employed for a job whose performance or completion requires a specified period;
  5. A task work / mission permit allowing for an employer to bring an employee from outside of the country in order to perform temporary work or a specific project for a definite term;
  6. A part time work permit;
  7. A juvenile work permit allowing for an employer to employ a juvenile between the age of 15 and 18;
  8. A student training and employment permit allowing for an employer to train or employ a student over the age of 15;
  9. GCC national work permit allowing employers to employ nationals of other GCC states;
  10. Golden visa work permit allowing the employment of an employee in the UAE who holds a golden visa;
  11. National trainee work permit; and
  12. Self-employment permit allowing individuals to engage in freelance work (under self residence for foreign nationals).

Additional types of work permits may be introduced in accordance with the provisions of the New Law.

  1. Equality and Non-Discrimination

The New Law introduces the prohibition of discrimination on the basis of: race, ethnicity, sex, religion, national origin, or on the grounds of disability (Article 4 of the New Law).

Women are entitled to identical wages for the same work (Article 4(4) of the New Law).

  1. Employment Contracts

Article 10(1) of the Executive Regulations provides the minimum requirements necessary for the purpose of a valid employment contract.

Article 10(2) of the Executive Regulations specifically permits an employer (with the consent of an employee) to add additional provisions (over those stipulated under Article 10(1) of the Executive Regulations) provided that the same are not in contradiction with the provisions of the New Law and the Executive Regulations.

The Ministry shall prepare (pursuant to Article 10(4) of the Executive Regulations) contract forms for:

  1. Full time employment;
  2. Part time employment;
  3. Flexible work employment;
  4. Remote work employment; and
  5. Job sharing employment.

The Ministry may as required introduce further standard form contracts.  It will be interesting to see if free zones (e.g.: JAFZA, DAFZA, DMCC and DDA) which are subject to the New Law follow suite.  At the date of this client alert not all free zones have introduced new standard form contracts in compliance with the New Law and Executive Regulations.

  1. Salary

All employers registered with the Ministry are required to pay employees under the Wage Protection System (“WPS”) (Article 16(1)(b) Executive Regulations).  All wages are to be paid in AED unless agreed otherwise by the contracting parties.  How this will work in practice given WPS has previously provided for payment only AED remains to be seen.

Article 25 of the New Law sets out permitted deductions from an employee’s salary.  Notably Article 25(1)(b) of the New Law puts a limit on the percentage of salary that can be deducted at 20%, it is unclear if this is a given month or during a year.  Consideration will need to be given to circumstances where housing loans or the like are advanced and then repaid.

Article 26 of the New Law provides that a minimum wage may be set in the future.

  1. Contract Term

One fundamental change under the New Law is the abolition of unlimited term contracts.  The New Law introduces a maximum fixed term of 3 years (Article 8(3) of the New Law), albeit it is our understanding that employers which are Dubai onshore entities will continue to be granted only 2 year work permits and as such fixed term contracts in such instances will be granted on the basis of 2 year renewable terms.

Fixed term contracts may be extended for up to a 3 year period (noting comments above regarding visa terms) or shorter periods one or more times and a renewal does not necessarily have to involve express written notice and consent, instead it can be extended implicitly (Article 8(5) of the New Law).

  1. Probationary Period

As with the Previous Law, probationary periods can run for a period not to exceed 6 months (Article 9(1) of the New Law)).  An employer wishing to terminate during a probationary period must provide at least 14 days’ notice to terminate.  In the event that an employee wishes to terminate (Article 9(1) of the New Law during the probationary period, the employee must: provide at least 30 days’ notice where they wish to take on employment with another employer in the UAE (Article 9(2) of the New Law); or provide at least 14 days’ notice where the employee wishes to leave the UAE (Article 9(3) of the New Law).

  1. Employer Obligations

An employer may not assign work to an employee that is “fundamentally different” to the work agreed in the employment contract (Article 12 of the New Law).

An employer is obliged amongst other things to: keep employee files in accordance with the provisions of Article 13(1) of the New Law; invest in the development of skills of employees (Article 13(5) of the New Law); bear the costs of private healthcare in accordance with corresponding legislation (Article 13(8) of the New Law); and provide its employees (upon the employee’s request) at termination with a confirmatory notice setting out date of joining, date of expiry, total service, last wage, job title and the reason for termination, even if the contents of that letter reduces the ability of the exiting employee to gain employment (Article 13(11) of the New Law).

  1. Employee Obligations

The employee is under various obligations pursuant to Article 16 of the New Law, these include but are not limited to obligations of: confidentiality (Article 16(4) of the New Law); developing functional and professional skills (Article 16(8) of the New Law); and honesty and professionalism in the performance of work (Article 16(2) of the New Law).

  1. Working Hours / Overtime

Subject to exceptions under the Executive Regulations, the maximum working hours for an employee is 8 hours a day or 48 hours per week, with an emphasis on the word “or” (Article 17(10) of the New Law).

Article 15(1) of the Executive Regulations stipulates specific circumstances where time spent by an employee travelling to their workplace will count towards their working hours.  As a general rule such travel time does not apply (Article 17(3) of the New Law).

Overtime payment mechanisms are set out under Article 19 of the New Law.  A maximum of 2 hours overtime a day is permitted (Article 19(1) of the New Law).  Overtime is paid at a 25% uplift of basic salary save where the hours of overtime take place between 10pm and 4am when overtime is paid at a 50% uplift of basic salary (Article 19(3) of the New Law).

If work is required on a rest day the overtime payment is paid at a 50% uplift of basic salary (Article 19(4) of the New Law).

Overtime entitlement does not extend to those categories of employees set out in Article 15(4) of the Executive Regulations. Furthermore such categories of worker are also exempt from the maximum work hours.  Employees who are exempt include directors and board Chairman and persons holding supervisory positions, it remains to be seen how this will work in practice.

  1. End of Service Gratuity

The rules regarding the payment of end of service gratuity under the New Law introduce two key changes: 1) the concept of deductions to gratuity entitlement where an employee terminates their employment (prior to the completion of 5 years’ service) is removed; and 2) the law is now specific in terms of UAE nationals employed in the private sector having no rights to end of service gratuity.  All other gratuity provisions remain as per the Previous Law i.e. gratuity is payable after 1 years’ continuous service, calculated only against base salary, capped at 2 years’ salary and calculated on the basis of 21 days base salary for the first 5 years of service and 30 days base salary for service over 5 years.  Entitlement to gratuity for part years served after the conclusion of the first year of continuous service remain.

It is worth noting that the New Law does (under Article 51(8)) leaves the possibility that end of service may be replaced by an alternative pensions system likely to be similar to the DEWS system operational in the Dubai International Financial Centre.

Article 53 of the New Law provides that all employee entitlements are to be paid within 14 days from the date of contract expiration.

Article 29 of the Executive Regulations places controls on what deductions an employer can make against end of service gratuity.  This does include the repayment of loans (Article 29(1)(a) of the Executive Regulations).

Article 30 of the Executive Regulations regulates how end of service will be paid to employees who are not full time employees.

  1. Labour Claims

Article 55(1) of the New Law provides that where an employee has a claim against their employer and the claim does not exceed AED 100,000, then any court fees which would be normally payable by the employee are waived.

  1. Holiday Entitlement

The New Law provides for a minimum holiday entitlement of 30 days (typically this is reflected in employment contracts as 25 working days) (Article 29(1) of the New Law).  For new employees holiday entitlement accrues at 2 days per month for the first 6 months of service.

Part time workers are entitled to holiday pursuant to the requirements of Article 18 of the Executive Regulations.

Article 19 of the Executive Regulations provides that where an employer has allowed for the carry over of balance of unused holiday entitlement (Article 29(5) of the New Law).  Article 19(1) of the Executive Regulations provides that an employee may carry forward no more than half of their annual leave into the following year.

Article 19(2) of the Executive Regulations provides that where an employee’s service is terminated, a cash allowance for accrued but unused holiday at the date of termination is payable based on basic salary.

  1. Maternity Leave

Article 30 of the New Law provides 60 days of maternity leave, 45 days at full pay and 15 days at half pay.  Additional unpaid leave is available in certain medical circumstances.

For employees returning from their maternity leave, and for a period not exceeding 6 months from the date of delivery shall be entitled to 2 daily rest periods for breastfeeding not to exceed an hour each day of entitlement.

  1. Sick Leave

Following the completion of a probation period, an employee is entitled (under Article 31 of the New Law) to sick leave of no more than 90 consecutive or intermittent days each year based on: a) 15 days full pay; b) 30 days with half pay; and c) the period thereafter unpaid.

An employer may terminate the service of an employee after sick leave has been exhausted (Article 31(5) of the New Law).

Article 20(1) of the Executive Regulations recognises that no sick leave will be paid where illness relates to abuse of drugs or alcohol or a violation of an employer’s safety instructions.

  1. Various Leaves

The New Law (Article 32 and Article 21 of the Executive Regulations) introduces a number of additional leave entitlements including parental leave, study leave, mourning leave, sabbatical leave for UAE nationals performing national or reserve service.  Unpaid leave entitlement is covered under Article 33 of the New Law.

  1. Wrongful Termination

The arbitrary dismissal provisions under the Previous Law have been abolished and replaced by Article 47 of the New Law, which provides that an employee’s termination is unlawful if the termination relates to: a) filing a serious complaint with the Ministry; or b) filing a case against the employer which has proven to be correct.

Any successful wrongful termination claim compensation is capped at 3 months of salary- subject to the court’s discretion.

  1. Non-Competes

Article 10 of the New Law allows non-compete provisions to be applied to protect legitimate business interests.  Such non-competes are not to exceed 2 years.

Article 12 of the Executive Regulations provides that in order for a non-competition clause to apply then the following must be specified: a) geographical scope; b) term not to exceed 2 years; and c) nature of work that is being prohibited.

Any non-compete provision will have no standing where the employer has terminated the employee’s employment.  Article 12(2) provides that the enforcement of any non-compete requires the employer to demonstrate damage arising from the breach.

Article 12(c) of the Executive Regulations provides that certain categories of employee may not be subject to non competes.

  1. Suspension

An employer may suspend an employee for a period of 30 days for the purposes of conducting a disciplinary investigation (Article 40(1) of the New Law).  During that suspension period an employer is entitled to suspend half of the suspended employee’s salary.  Insofar as the employee is not terminated following their suspension, the employee’s suspended salary shall be repaid.

Further suspension rights exist where an employee has been accused of assault or criminal behaviour involving fraud or dishonesty.

  1. Disciplinary Rules

Article 39 of the New Law together with Article 24 of the Executive Regulations regulate disciplinary rules and sanctions, which broadly speaking run from written notices, wage deductions and suspensions.

  1. Termination of Employment

Article 42 of the New Law provides that a contract of employment can be terminated as follows: a) mutual agreement; b) expiry of a contract term unless renewed; c) death of the employee or permanent incapacity; d) final judgment involving a prison sentence of greater than 3 months; e) closure of the employer; f) insolvency of the employer; or g) failure of the employee to renew their work permit.

Under Article 43 of the New Law, either party is entitled to terminate the contract of employment for any legitimate reason, provided that notice is given.  Minimum notice is 30 days and maximum notice is 90 days.

Article 44 of the New Law is in effect the new Article 120 from the Previous Law.  Article 44 sets out circumstances in which termination without notice can occur.

Article 46 of the New Law provides that an employee’s service cannot be terminated by an employer before exhausting all sick leave.

  1. Compliance

Employers are required to ensure that unlimited term employment contracts are converted to fixed term arrangements in accordance with the New Law and Executive Regulations within 1 year of the adoption of the New Law, i.e., 2 February 2023.

The provisions of the New Law and Executive Regulations apply to all unlimited term contracts governed pursuant to the Previous Law.

© 2022 Bracewell LLP
For more articles on UAE legal updates, visit the NLR United Arab Emirates section.

EV Buses: Arriving Now and Here to Stay

In the words of Miss Frizzle, “Okay bus—do your stuff!”1 A favorable regulatory environment, direct subsidy, private investment, and customer demand are driving an acceleration in electric vehicle (EV) bus adoption and the lane of busiest traffic is filling with school buses. The United States has over 480,000 school buses, but currently, less than one percent are EVs. Industry watchers expect that EV buses will eventually become the leading mode for student transportation. School districts and municipalities are embracing EV buses because they are perceived as cleaner, requiring less maintenance, and predicted to operate more reliably than current fossil fuel consuming alternatives. EV bus technology has improved in recent years, with today’s models performing better in cold weather than their predecessors, with increased ranges on a single charge, and requiring very little special training for drivers.2 Moreover, EV buses can serve as components in micro-grid developments (more on that in a future post).

The Investment Incline

Even if the expected operational advantages of EV buses deliver, the upfront cost to purchase vehicles or to retrofit existing fleets remains an obstacle to expansion.  New EV buses price out significantly more than traditional diesel buses and also require accompanying new infrastructure, such as charging stations.  Retrofitting drive systems in existing buses comparatively reduces some of that cost, but also requires significant investment.3

To detour around these financial obstacles, federal, state, and local governments have made funding available to encourage the transition to EV buses.4 In addition to such policy-based subsidies, private investment from both financial and strategic quarters has increased.  Market participants who take advantage of such funding earlier than their competitors have a forward seat to position themselves as leaders.

You kids pipe down back there, I’ve got my eyes on a pile of cash up ahead!

Government funding incentives for electrification are available for new EV buses and for repowering existing vehicles.5 Notably, the Infrastructure Investment and Jobs Act committed $5 billion over five years to replace existing diesel buses with EV buses. Additionally, the Diesel Emissions Reduction Act provided $18.7 million in rebates for fiscal year 2021 through an ongoing program.

In 2021, New York City announced its commitment to transition school buses to electric by 2035.  Toward that goal, the New York Truck Voucher Incentive Program provides vouchers to eligible fleets towards electric conversions and covers up to 80% of those associated costs.6  California’s School Bus Replacement Program had already set aside over $94 million, available to districts, counties, and joint power authorities, to support replacing diesel buses with EVs, and the state’s proposed budget for 2022-23 includes a $1.5 billion grant program to support purchase of EV buses and charging stations.

While substantial growth in EV bus sales will continue in the years ahead, it will be important to keep an eye out for renewal, increase or sunset of these significant subsidies.

Market Players and Market Trends, OEMs, and Retrofitters

The U.S is a leader in EV school bus production:  two of the largest manufacturers, Blue Bird and Thomas Built (part of Daimler Truck North America), are located domestically, and Lion Electric (based in Canada) expects to begin delivering vehicles from a large facility in northern Illinois during the second half of 2022.  GM has teamed up with Lighting eMotors on a medium duty truck platform project that includes models prominent in many fleets, and Ford’s Super Duty lines of vehicles (which provide the platform for numerous vans and shuttle vehicles) pop up in its promotion of a broader electric future. Navistar’s IC Bus now features an electric version of its flagship CE series.

Additionally, companies are looking to a turn-key approach to deliver complete energy ecosystems, encompassing vehicles, charging infrastructure, financing, operations, maintenance, and energy optimization. In 2021, Highland Electric Transportation raised $253 million from Vision Ridge Partners, Fontinalis Partners (co-founded by Bill Ford) and existing investors to help accelerate its growth, premised on a turn-key fleet approach.7

Retrofitting is also on the move.  SEA Electric (SEA), a provider of electric commercial vehicles, recently partnered with Midwest Transit Equipment (MTE) to convert 10,000 existing school buses to EVs over the next five years.8 MTE will provide the frame for the school uses and SEA will provide its SEA-drive propulsion system to convert the buses to EV.9 In a major local project, Logan Bus Company announced its collaboration with AMPLY Power and Unique Electric Solutions (UES) to deploy New York City’s first Type-C (conventional) school bus.10

Industry followers should expect further collaborations, because simplifying the route to adopting an EV fleet makes it more likely EV products will reach customers.

Opportunities Going Forward

Over the long haul, EV buses should do well. Scaling up investments and competition on the production side should facilitate making fleet modernization more affordable for school districts while supporting profit margins for manufacturers. EVs aren’t leaving town, so manufacturers, fleet operators, school districts and municipalities will either get on board or risk being left at the curb.

Article By Michael J. Small and Samantha Ruppenthal at Foley & Lardner LLP

For more utilities and transportation legal news, click here to visit the National Law Review.

 

 

1https://shop.scholastic.com/parent-ecommerce/series-and-characters/magic-school-bus.html

2https://www.busboss.com/blog/having-an-electric-school-bus-fleet-is-easier-than-many-people-think

3https://thehill.com/opinion/energy-environment/570326-electric-school-bus-investments-could-drive-us-vehicle

4https://info.burnsmcd.com/white-paper/electrifying-the-nations-mass-transit-bus-fleets

5https://stnonline.com/partner-updates/electric-repower-the-cheaper-faster-and-easier-path-to-electric-buses/

6https://www1.nyc.gov/office-of-the-mayor/news/296-21/recovery-all-us-mayor-de-blasio-commits-100-electric-school-bus-fleet-2035

7https://www.bloomberg.com/press-releases/2021-02-16/highland-electric-transportation-raises-253-million-from-vision-ridge-partners-fontinalis-partners-and-existing-investors

8https://www.electrive.com/2021/12/07/sea-electric-to-convert-10k-us-school-buses/#:~:text=SEA%20Electric%20and%20Midwest%20Transit,become%20purely%20electric%20school%20buses.

9 Id.

10https://stnonline.com/news/new-york-city-deploys-first-type-c-electric-school-bus/

© 2022 Foley & Lardner LLP

Five U.S. Immigration Law Trends to Watch in 2022

A series of significant developments in U.S. immigration law has already marked the beginning of 2022 and more can be expected.

In January, the Biden Administration unveiled a series of policies aimed at attracting and retaining international talent in STEM (science, technology, engineering, and math) fields. U.S. Citizenship and Immigration Services (USCIS) and Customs and Border Protection (CBP) have made strides in rolling out work authorization for dependent spouses of holders of visas in the E (Treaty Trader or Treaty Investor) and L (Intra-company Transfer) categories, thereby eliminating the need for a separate application for work authorization. Meanwhile, the Department of Justice (DOJ) has remained active in enforcement of the Immigration and Nationality Act (INA) immigration anti-discrimination provisions, with several settlements in 2021 involving allegations of discrimination preventing discrimination against U.S. workers and a renewed focus on investigating claims of document abuse in Form I-9 completion, maintenance, and reverification. This overlaps with the continued I-9 flexibility in response to the COVID-19 pandemic granted by Immigration and Customs Enforcement (ICE), which remains in effect until April 2022. All of this follows on the heels of ongoing discussion in Congress of possible immigration reform (as most recently reflected in the Build Back Better bill).

Below are five areas to keep an eye on in the year ahead.

STEM-Related Policy Changes

New policies rolled out by the Biden Administration seek to provide greater predictability and clarity for pathways for international STEM talent, by way of the F-1 student, J-1 exchange visitor, O-1 extraordinary ability, and EB-2 National Interest Waiver Immigrant visa categories:

  • F-1 STEM OPT: The Department of Homeland Security (DHS) announced 22 new fields of study added to the STEM Optional Practical Training (OPT) program to enhance the contributions of nonimmigrant students studying in STEM fields. These new fields, listed in a Federal Register notice, include Bioenergy, Forestry, Human-Centered Technology Design, Cloud Computing, Climate Science, Earth Systems science, Economics, Computer Science, Geobiology, Data Science, and Business Analytics. DHS is also creating a process for the public to request a degree be added or removed from the designated degree list.
  • J-1 Exchange Visitors: The Department of State will allow J-1 Exchange Visitors enrolled in a pre-doctoral STEM program to qualify for an extension of up to 36 months for purposes of practical training in 2022 and 2023. This expansion of the J-1 program was rolled out in response to a Joint Statement of Principals in Support of International Education and pressure from Department-designated sponsors to increase STEM opportunities for international students.
  • O-1 Visas: USCIS released detailed guidance describing how entrepreneurs can qualify for O-1 (Individuals with Extraordinary Ability or Achievement) classification, including references to specific sources of evidence in STEM-related fields. The new guidance also expands on what constitutes a “field” of endeavor to include accomplishments in different but related occupations. In addition, it clarifies the use of comparable evidence to satisfy the regulatory criteria (see O-1 Visas Abound: USCIS Provides Detailed Guidance on O-1 Visa Eligibility).
  • EB-2 NIW Expansion: USCIS announced updated guidance on adjudicating requests for National Interest Waivers (NIW) regarding job offers and labor certification requirements for advanced degree professionals and individuals with exceptional ability, specifically in STEM-related fields. The new guidance grants certain evidentiary considerations to persons with advanced degrees in STEM fields, especially in focused critical and emerging technologies as determined by the National Science and Technology Council or the National Security Council. Under the new guidance, USCIS also considers an advanced degree in a STEM field tied to a proposed endeavor as an “especially positive factor” to show the individual is well-positioned to advance an endeavor of national importance.

E and L Spousal Work Authorization

USCIS announced new guidance in November 2021 clarifying that L-2 and certain E-2 spouses will no longer need employment authorization documents (EADs) to work. The guidance resulted from a court-approved settlement of ongoing litigation in response to extraordinarily long delays to obtaining EADs. As of January 31, 2022, spouses entering the United States in L-2 or E-2 status may obtain work authorization at the border by asking CBP to give them a “spousal” designation in their I-94 record that can be used for Form I-9 Employment Eligibility Verification purposes.

Department of Justice Immigration Anti-Discrimination Enforcement

While the DOJ and its Immigrant and Employee Rights Section have begun diversifying the scope of investigations, their enforcement of anti-discrimination provisions of the INA remains focused on protecting U.S. citizen workers. Several settlements in 2021 involved allegations of discrimination against U.S. citizen workers. The settlements resolved reasonable cause findings of discrimination against U.S. workers in Program Electronic Review Management (PERM) recruitment methods and H-2B (temporary non-agricultural) visa worker sponsorship programs, respectively. They reflect an ongoing trend following settlements that resolved allegations of discrimination in several companies’ PERM recruitment methods, despite adherence to the Department of Labor’s Labor Certification regulations.

ICE I-9 Flexibility Continues

On March 20, 2020, DHS announced that it would exercise prosecutorial discretion to defer the physical presence requirements associated with the Form I-9 Employment Eligibility Verification. This policy has been periodically extended, most recently to April 30, 2022. Under the guidance, employers can complete the Form I-9 verification process remotely for employees who work exclusively in a remote setting due to COVID-19-related precautions. However, employers must conduct in-person verification of identity and employment eligibility of such employees within three days of returning to the work location.

Immigration Reform

More business immigrant visas would become available under the most recent iteration of the Build Back Better reconciliation bill. If approved by the Parliamentarian and passed as it stands, the bill would make more immigrant visas available by:

  • Recapturing unused visa numbers from 1992 to 2021;
  • Retaining the availability of Diversity Visas from fiscal years 2017 to 2021; and
  • Making it possible for individuals with approved employment-based immigrant visas and priority dates more than two years away to file applications for adjustment of status by paying an additional $1,500 fee.

The bill also would substantially increase many filing fees. Rather than depositing those fees into the USCIS account, the supplemental fees would be deposited into the U.S. Treasury’s general funds. Another attempt at immigration reform has been introduced by House Republicans, the Dignity Act. The Dignity Act proposes paths to permanent residence and citizenship for certain undocumented individuals in exchange for more border security and mandating E-Verify. The fate of immigration reform remains in flux and should be a point of contention in the upcoming elections.

Jackson Lewis P.C. © 2022

Article By Otieno B. Ombok of Jackson Lewis P.C.

For more articles on immigration, visit the NLR Immigration section.

Europol: More Than Half of Counterfeits Originate in China

On March 7, 2022, the European Union Agency for Law Enforcement Cooperation (Europol) and the European Union Intellectual Property Office (EUIPO) jointly released the Intellectual Property Crime Threat Assessment 2022. Per the Assessment, China (including Hong Kong) was the main source of counterfeits based on number of counterfeits and by value of the counterfeits seized at the EU external borders.  Almost 76% of the fake goods detained were for trademark infringement; design infringement was the second most reported at 23% while copyright was third with 15%.

China and Turkey remain the main countries of origins for counterfeit clothing, shoes, bags, watches, and jewelry seized at the EU’s border. These goods are mostly ordered online and discovered as part of postal shipments or on passengers entering the EU.

Similarly, China is the country of origin for most of the seized counterfeit electrical/electronic and computer equipment, mobile phones and accessories. With respect to mobile phones, the Assessment states,

…the visual appearance of the counterfeit devices is very convincing, closely mimicking the external characteristics of the original phones. However, typically some features and software characteristics are missing and the International Mobile Equipment Identity (IMEI) is often fake.  The use of cheap and substandard electric components, which can be found in fake batteries, headphones or chargers, pose safety risks.

“China and Turkey were among the most frequently reported non-EU countries of origin for counterfeit food and drink seized at the EU’s external border.” Similarly, counterfeit perfumes and cosmetic products often originate from China and Turkey.

In addition to ready-to-use IPR-infringing goods, product components, such as aroma compounds, fixatives and solvents, are increasingly being seized. These components are used to create the final counterfeit products in the EU.

More worrisome, China and Turkey were the main origin of counterfeit pharmaceutical products.

Toys round out the top 10 counterfeits with China also being main point of origin.

The full Assessment is available here: IP_Crime_Threat_Assessment_2022_FullR_en.

Article By Aaron Wininger of Schwegman, Lundberg & Woessner, P.A.

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

© 2022 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Sugar Association Files Supplemental Petition Urging Regulatory Changes for Artificially Sweetened Foods

  • This week the Sugar Association submitted a Supplemental petition (“Supplement”) to FDA to further support the Association’s June 2020 petition Misleading Labeling Sweeteners and Request for Enforcement Action (“Petition”).  As noted in a previous post, the Association’s petition asks FDA to promulgate regulations requiring additional labeling disclosures for artificially sweetened products, which it believes are necessary to avoid consumer deception. Other than acknowledging accepting the petition for filing on Nov. 30, 2020, (see Regulations.gov), the agency has not responded.
  • The Supplement provides new data and information that the Association believes supports its original Petition, alleging that misleading labeling is “getting more prolific in the absence of FDA action.”  According to the Association, the number of new food product launches containing non-sugar sweeteners has increased by 832% since 2000, with 300% growth in just the last five years.  To further support its position, the Association references consumer research that it commissioned, suggesting that consumers think it is important to know if their foods contain sugar alternatives.
  • The Association is urging FDA to mandate significant additional disclosures on labels of artificially sweetened food products, including the following requirements to —
    • Clearly identify the presence of alternative sweeteners in the ingredient list;
    • Indicate the type and quantity of alternative sweeteners, in milligrams per serving, on the front of package of food and beverage products consumed by children;
    • Disclose the sweetener used on the front of package for products making a sugar content claim, such as “Sweetened with [name of Sweetener(s)]” beneath the claim;
    • Disclose gastrointestinal effects of various sweeteners at minimum thresholds of  effect;
    • Require that no/low/reduced sugars claims be accompanied by the disclosure “not lower in calories” unless such products have 25% fewer calories than the comparison food.

Article By The Food and Drug Law Practice Group at Keller and Heckman LLP

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

© 2022 Keller and Heckman LLP

Law Firms Respond to Russia’s Invasion of Ukraine: How the Legal Industry & the Public Can Help

On February 21, 2022, Russian President Vladimir Putin ordered ground troops into the eastern Ukrainian provinces of Donetsk and Luhansk. Invading under the guise of establishing independence for the region on February 24, Russia started bombing key points of interest around the country, including the capital city of Kyiv. At the time of writing, the skirmishes remain ongoing, with Russia expanding its invasion force as the days go on.

The ramifications of Russia’s war are widespread. In Ukraine, infrastructural damage is considerable, an estimated 2 million civilians are evacuating or have been driven from their homes. The death toll remains uncertain at this time, but the Ukrainian health ministry estimates that hundreds of citizens have been killed as a result of the violence. Globally, financial markets are in a state of rapid flux, seeing huge rises in inflation, a strained supply chain and plummeting stock prices.

Law firms in the United States and abroad have responded to the conflict by offering pro bono services in anticipation of resultant legal complications and organized means by which money can be donated to Ukrainian humanitarian efforts.

How Have Law Firms Responded to Russia’s Invasion of Ukraine?

In some instances, firms have also closed offices in Ukraine to protect workers, and severed ties with Russian businesses. Law firms that have closed offices in Ukraine include Dentons, CMS and Baker McKenzie, which have closed offices in Kyiv.

“Dentons has established a taskforce to monitor and manage the crisis situation, with a primary focus on protecting our people,”  Tomasz Dąbrowski, CEO of Dentons Europe, told the National Law Review. “We are in regular contact with our team in Kyiv and are providing our colleagues and their families with any possible assistance, including transport, relocation and accommodation assistance in the neighboring countries. Furthermore, we have seen a wave of kindness and generosity from our people across Europe, who have volunteered to provide accommodation in their homes for Ukrainian colleagues.  Furthermore, in addition to the financial support our Firm is providing to our Ukrainian colleagues, we have also received financial donations from around the world to help them resettle.”

Many law firms have announced they are closing offices in Russia, including Squire Patton Boggs, Latham & Watkins Freshfields Bruckhaus Deringer, Akin Gump Strauss Hauer & Feld and Morgan Lewis & Bockius, among others. Norton Rose Fulbright announced March 7 that they are winding down their operations in Russia and will be closing their Moscow office as soon as they can, calling Russia’s invasion of Ukraine “increasingly brutal.”

“The wellbeing of our staff in the region is a priority. We thank our 50 colleagues in Moscow for their loyal service and will support them through this transition.”

Norton Rose Fulbright said they “stand unequivocally with the people of Ukraine,” and are taking steps to respond to the invasion.

“Some immediate actions are possible and we are taking them. We are not accepting any further instructions from businesses, entities or individuals connected with the current Russian regime, irrespective of whether they are sanctioned or not. In addition, we continue to review exiting from existing work for them where our professional obligations as lawyers allow. Where we cannot exit from current matters, we will donate the profits from that work to appropriate humanitarian and charitable causes,” the statement read. “We are working with our charitable partners in every region to raise funds to help the people of Ukraine, as well as providing pro bono support to those Ukrainians and others who are being forced to relocate.”

Law firms have also stepped forward to offer pro bono assistance to those affected by the Russian invasion of Ukraine.

Law Firms Offering Pro Bono Assistance to Ukraine

Akin Gump Partner and Pro Bono Practice leader Steven Schulman explained how the legal industry is collaborating and working to provide assistance:

“So what we often do in these crises, we will self organize, [and] say who’s a point person who knows what’s going on, and then we will share information so that again, we’re lightening the load on the legal aid organizations.”

Another law firm offering assistance to Ukraine is  Covington & Burling, which the country hired to help pursue its claim against  Russia at the International Court of Justice (ICJ). Specifically, Ukraine asked the court to order Russia to halt its invasion. Covington filed a claim on behalf of Ukraine to the ICJ.

Nongovernmental organizations (NGOs) are providing emergency aid in Ukraine, as well as in neighboring countries, such as Poland, Hungary, Slovakia and Romania to help people displaced by the war as they come across the border, Mr.Dąbrowski said. These organizations are providing food, water, hygiene supplies and other necessities, and urgent psychological counseling. Specific NGOs on the ground in Ukraine include Mercy Corps, Fight for Right, Project HOPE, Hungarian Helsinki Committee, and  Fundacja Ocalenie, among others.

However, NGOs need cash donations in order to keep providing aid. Mr.Dąbrowski detailed what pro bono work Dentons is doing, and how the firm is supporting NGOs:

“Our Positive Impact team is in touch with numerous NGOs and lawyers from our firm to identify opportunities for pro bono legal advice, mainly in the countries which share a border with Ukraine.  We are already working with NGOs in Poland and Hungary which are helping Ukrainian refugees displaced by the war. We are assisting with issues related to employment law, contracts, establishment of charitable foundations, etc… We are also in discussions with an international relief agency which is looking to set up operations within Ukraine.

While men between the ages of 18 and 60 are currently prohibited from leaving Ukraine, as of March 10, 2022, the conflict has created one of the largest refugee crises within the last few decades.

“We have activated our registered charitable foundation to collect donations from our people around the world to support Ukrainian families – and particularly children –  displaced by the war, including some of our own people from Kyiv.  So far, our colleagues from around the world have donated or pledged close to €300,000,” Mr.Dąbrowski said. “We have already distributed €60,000 of that to eight NGOs in Poland, Hungary and Romania, which are providing emergency aid, food and water, hygiene supplies, transportation, medical and psychological care, shelter and schooling to Ukrainian civilians fleeing from the war”

Concerns with immigration and refugee asylum is the next expected complication. In the short-term, the Department of Homeland Security is prioritizing Temporary Protected Status (TPS) designations for those already in the U.S.

For the public, there are a number of actions to take to support Ukrainians. However, those wishing to help should make sure to do their research before making any donations in order to ensure the funds end up in the right hands.

How Can Members of the Public Help Ukraine?

Possible scam organizations and outreach programs are common during international crises, so it’s important to know the signs of fraudulent charities. Some best practices for providing support include:

  • Giving directly to an organization rather than through shared donation links on social media

  • Being wary of crowdfunding efforts

  • Doing a background check on an organization and its donation claims using Charity Watch, Give.org, and Charity Navigator.

Some examples of charitable organizations focused on Ukraine relief include:

Informational resources for those affected are provided below:

Conclusion

Law firms and the public alike have stepped up to offer assistance and financial help to those most affected by the Russian invasion. Law firms cutting ties with Russian businesses and closing offices in Russia shows that the legal industry is standing behind Ukraine as the conflict continues to escalate.

In upcoming coverage, the National Law Review will be writing about how law firms are helping clients handle Russian sanctions, as well as the immigration implications of refugees displaced by the war in Ukraine.

*The quotes and input of interviewees reflect the latest information on the Russian invasion of Ukraine as of March 7, 2022. Readers can find the latest legal news from around the world on The National Law Review’s Global Law page.*

Article By Chandler Ford, Jessica Scheck, and Rachel Popa of the The National Law Review / The National Law Forum LLC

Copyright ©2022 National Law Forum, LLC

Ed Sheeran in “Shape of You” Court Battle

Singer Ed Sheeran is currently giving evidence in a three week High Court copyright trial over his 2017 chart-topping hit “Shape of You.”

Sheeran has been accused by two musicians, Sami Chokri and Ross O’Donoghue, that his hit song, “Shape of You” plagiarises “particular lines and phrases” of their 2015 composition, “Oh Why.” The two songs in question share a similar melody.

The dispute began back in May 2018 and saw Sheeran and his co-writers prevented from obtaining an estimated £20 million in royalties from performances or broadcasts of “Shape of You” after Chokri and O’Donaghue accused Sheeran and his co-writers of “appropriating” their music. Chokri claims that he sent the track to Sheeran in a bid to work with the star, but later heard the chorus on “Shape Of You” – which became the biggest selling single of 2017 in the UK.

Sheeran’s lawyers told the High Court at that time, that the musician and his co-writers had no recollection of having heard the song in question before the dispute began and asked the High Court to declare that he and his co-writers had not infringed Chokri and O’Donoghue’s copyright, with Sheeran also stating his reputation had been tarnished by the allegations.

In July 2018, Chokri and O’Donoghue issued a counterclaim for “copyright infringement, damages and an account of profits in relation to the alleged infringement”.

In a November 2020 ruling, the parties involved “anticipated that they would incur costs in the region of £3 million between them on the dispute”.

Andrew Sutcliffe QC, for Chokri and O’Donoghue, said the question at the heart of the case was “how does Ed Sheeran write his music?” and whether he “makes things up as he goes along during songwriting sessions or whether his songwriting process involves the collection and development of ideas over time which reference and interpolate other artists.”

Whilst the trial plays out in the High Court over the course of the next three weeks, it serves as a timely reminder that content created should be original and independent to avoid falling within the remit of copyright infringement. Otherwise, the risk of copyright infringement can be reduced by:

  • Obtaining relevant authorisations and approvals from a Collective Management Organisation, such as; PPL PRS (the UK’s music licensing company) or the Copyright Licensing Agency (for printed material);
  • Obtaining relevant permissions from a copyright owner/the copyright owner’s agent which may require the payment of licencing fees;
  • Entering into an assignment of intellectual property where copyright work has been produced as part of an underlying contractual agreement; and
  • Checking any relevant copyright/licencing terms to ascertain whether there is permission to reproduce certain content.

Article By Keisha Phippen of K&L Gates

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

Copyright 2022 K & L Gates

Chinese APT41 Attacking State Networks

Although we are receiving frequent alerts from CISA and the FBI about the potential for increased cyber threats coming out of Russia, China continues its cyber threat activity through APT41, which has been linked to China’s Ministry of State Security. According to Mandiant, APT41 has launched a “deliberate campaign targeting U.S. state governments” and has successfully attacked at least six state government networks by exploiting various vulnerabilities, including Log4j.

According to Mandiant, although the Chinese-based hackers are kicked out of state government networks, they repeat the attack weeks later and keep trying to get in to the same networks via different vulnerabilities (a “re-compromise”). One such successful vulnerability that was utilized is the USAHerds zero-day vulnerability, which is a software that state agriculture agencies use to monitor livestock. When the intruders are successful in using the USAHerds vulnerability to get in to the network, they can then leverage the intrusion to migrate to other parts of the network to access and steal information, including personal information.

Mandiant’s outlook on these attacks is sobering:

“APT41’s recent activity against U.S. state governments consists of significant new capabilities, from new attack vectors to post-compromise tools and techniques. APT41 can quickly adapt their initial access techniques by re-compromising an environment through a different vector, or by rapidly operationalizing a fresh vulnerability. The group also demonstrates a willingness to retool and deploy capabilities through new attack vectors as opposed to holding onto them for future use. APT41 exploiting Log4J in close proximity to the USAHerds campaign showed the group’s flexibility to continue targeting U.S state governments through both cultivated and co-opted attack vectors. Through all the new, some things remain unchanged: APT41 continues to be undeterred by the U.S. Department of Justice (DOJ) indictment in September 2020.

Both Russia and China continue to conduct cyber-attacks against both private and public networks in the U.S. and there is no indication that the attacks will subside anytime soon.

Article By Linn F. Freedman of Robinson & Cole LLP

Copyright © 2022 Robinson & Cole LLP. All rights reserved.

Defense Department Takes Aim at Anticompetitive Mergers in Defense Industry

Government says market concentration poses a national security risk.

In 1990, the Department of Defense could turn to 13 companies to produce tactical missiles, eight to make fixed-wing aircraft, and another eight to build ships. Now there are only three missile and three aircraft makers, and only two surface ship builders. There were eight satellite manufacturers in 1990; today there are only four. Tanks and other tracked vehicles are now made by a single company.

Such market consolidation is potentially harmful for the usual reasons, such as less innovation, higher prices, and a lower level of customer service. But when that customer is the DOD, having only one or a handful of defense equipment makers, suddenly critical military missions, military and civilian lives, and national security are put at risk, “[P]articularly in cases where the existing dominant supplier or suppliers are influenced by an adversary nation ….”

That is the worrisome assessment contained in a report issued by the DOD which is following up on President Biden’s July 2021 executive order, titled “Promoting Competition in the American Economy.” DOD is just one of the agencies now responding with plans to evaluate their respective competitive landscapes and to make recommendations to restore productive rivalries.

If market consolidation suggests harmful anticompetitive conditions, then the defense industry’s merger history should send up multiple flares. “Since the 1990s, the defense sector has consolidated substantially, transitioning from 51 to 5 aerospace and defense prime contractors,” the report says.

DOD offers five general recommendations to increase defense industry competition, saying it should:

  • Strengthen Merger Oversight. When a merger threatens DOD interests, DOD will support the Federal Trade Commission and Department of Justice in antitrust investigations and recommendations involving the defense industry.
  • Address Intellectual Property Limitations. Certain practices surrounding intellectual property and data rights have been used to limit competition in DOD purchasing and to induce “vendor-lock” and other undesirable results. DOD says it will identify its long-term intellectual property needs early in the bidding process. This should ensure that intellectual property is a key factor in evaluating competitive awards, and a negotiation objective in sole-source awards and when contracting with vendors willing to provide the government the intellectual property and rights it needs.
  • Increase New Entrants. To counteract the shrinking list of contractors, DOD says it will work to attract new entrants to the defense marketplace by reducing barriers to entry. This will be accomplished through small business outreach and support. DOD says it will use “acquisition authorities” that will give it the flexibility to adopt and incorporate commercial best practices to reduce barriers and attract new vendors.
  • Increase Opportunities for Small Businesses. DOD will increase small business participation in defense procurement, with an emphasis on increasing competition in priority segments of the defense industry.
  • Implement Sector-Specific Supply Chain Resiliency Plans. DOD calls for greater resilience in the supply chain for five priority sectors: casting and forgings, missiles and munitions, energy storage and batteries, strategic and critical materials, and microelectronics.

In June 2021, Bradley Martin, Ph.D., a retired Navy captain now with the RAND National Security Supply Chain Institute, wrote of the dangers of the defense industry’s shift to practices that make resupply of military equipment “highly questionable” should demand for equipment suddenly spike.

Abrams Main Battle Tank manufactured by General Dynamics, the sole producer of tanks and other tracked combat vehicles for the Department of Defense. Photo from General Dynamics’ website.

“If evaluated solely against meeting steady-state demand, the military operational supply chain works as it should,” Martin wrote. “The problem is not performance relative to incentives. Rather, the problem is that the existing guidance does not lead the system to conduct analyses and make decisions needed to support the highly demanding combat operations likely in a conflict with a major power. As a result, the ability of this system to properly support the joint force in the event of major conflict is at best untested and could be highly problematic.”

Recent Public and Private Actions

In addition to the government’s focus on the overall industry, it has been taking action to address specific instances of alleged and potentially anticompetitive behavior. In one instance, a private class action quickly followed.

In January, the FTC sued to stop Lockheed Martin Corp.’s $4.4 billion acquisition of Aerojet Rocketdyne Holdings Inc., marking the first time in decades the government opposed a defense industry merger. (Read FTC Sues to Torpedo Lockheed’s $4.4 Billion Aerojet Acquisition.)

The FTC noted that Aerojet, which reported more than $2 billion in 2020 revenue, is the last independent U.S. supplier of defense-critical missile propulsion systems. If the deal were to go through, the FTC said, “Lockheed will use its control of Aerojet to harm rival defense contractors and further consolidate multiple markets critical to national security and defense.”

Lockheed leads the pack of the largest defense contractors in the world. It is one of the leading suppliers of missile technology in a concentrated group that includes Raytheon Technologies, Inc., Northrop Grumman Corporation, and The Boeing Company. All are missile system prime contractors to the Department of Defense. The FTC says these companies are intermediaries between the U.S. government and the missile supply chain, including subcontractors like Aerojet.

In December 2021, a federal grand jury in Connecticut returned an indictment charging a former manager of leading aerospace engineering company Pratt & Whitney, Inc., and five executives of outsource engineering suppliers for participating in a long-running conspiracy to restrict the hiring and recruiting of employees among their respective companies. (Read Aerospace Execs Indicted for Conspiracy to Limit Worker Pay and Job Prospects.)

The conspiracy is said to have affected thousands of engineers and other skilled workers in the aerospace industry who perform services in the design, manufacturing, and servicing of aircraft components for both commercial and military purposes. According to the felony indictment, unsealed in U.S. District Court for the District of Connecticut, six individuals conspired with others to allocate employees by agreeing not to hire or solicit professionals from each other’s ranks.

Following the indictment, a jet engine mechanic formerly employed by Pratt & Whitney filed a class action suit in federal court in Connecticut against the company and five outsource engineer suppliers. The plaintiffs seek damages because of the alleged conspiracy to suppress labor costs and hamper employees’ career prospects using illegal no-poach agreements in violation of antitrust laws.

Ukraine Invasion Demonstrates ‘Rapid Escalation’

Combined with Russia’s invasion of Ukraine and the alarming specter of a widening conflict, security supply chain expert Bradley Martin’s assessment that the industry may not be set up to address a spike in demand for military equipment illustrates why the DOD’s plan to improve competition in the defense industry is an urgent one.

“The Ukraine crisis shows that situations can rapidly escalate, potentially leading to situations where spikes in demand might occur in largely unexpected ways,” Martin told the MoginRubin Blog. “If the U.S. had to deal with an expanded conflict in Europe, such as might occur if Russia were to threaten a NATO ally, DOD could reallocate munitions and supplies for some period, but expanding production and inventory over a longer period would be very challenging. This would likely be exactly the kind of conflict where low-standing issues with supply chains would show themselves, sometimes in unexpected ways.”

Defense is just one of several industries seeing increased scrutiny from enforcers. Healthcare also has been a focus of late (see our article regarding FTC’s action to stop a New England hospital merger). The technology sector is getting attention, too. As we wrote in February, chipmaker Nvidia called off its vertical acquisition of Arm Ltd. following an FTC challenge to the deal. A recent Treasury Department report on the alcoholic beverage industry foreshadows greater attention from the FTC and DOJ regarding deals in that sector.

In October the FTC said it was bringing back its policy of routinely restricting anticompetitive mergers, putting “industry on notice” that it will require aggressive acquirers to obtain prior approval “before closing any future transaction affecting each relevant market for which a violation was alleged, for a minimum of 10 years.” The agency is clearly making good on its promise.   

Edited by Tom Hagy for MoginRubin LLP.

© MoginRubin LLP
For more articles about antitrust, visit the NLR Antitrust Law section.

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