Twitter fined $546,000 in December 2020 by European Data Protection Authority for 2019 Breach Notification Violations

The Irish Data Protection Commission (DPC) fined Twitter 450,000 euros (about US$546,000) for failing to timely notify the Irish DPC within the required 72 hours of discovering a Q4 2018 breach involving a bug in its Android app, and also for failing to adequately document that breach.  The bug caused some 88,726 European Twitter users’ protected tweets to be made public.

The case is notable because it is the first fine levied against a U.S. technology company in a cross border violation under the EU’s General Data Protection Regulation’s (GDPR), which went into effect in 2018.  Under the GDPR, the member state of the foreign company’s EU headquarters takes the lead on inquiries on behalf of all the EU’s 27 member states. Because Twitter EU’s headquarters are in Ireland, the DPC took the lead on the investigating the 2018 breach incident, which Twitter attributed to poor staffing during the holidays.

Pursuant to Article 60 of the GDPR, the Irish DPC submitted its draft decision last May to the other EU DPAs. In the draft decision, the Irish DPC found Twitter’s violations to be negligent, but not intentional or systematic.  Other member states disagreed with the Irish DPC draft decision, due in part to the small proposed fine.  The Irish DPC‘s proposed fine was only a small fraction of the maximum fine amount permitted, which under GDPR is up to 4% of a company’s global revenue or 20 million euros ($22 million), whichever is higher. Twitter’s global annual revenue was reportedly about $60 million in 2018.

The Irish DPC responded to the criticisms from other member states by stating that its proposed fine under the GDPR was an “effective, proportionate and dissuasive measure” and brought the matter before the European Data Protection Board, which upheld most of the decision but directed Ireland to increase the fine.

The Twitter case is just the first of many cases involving U.S. companies before the Irish DPC, as there are some 20 other pending inquiries. Ireland also serves as the EU headquarters for U.S. technology companies such as Facebook, Apple and Google.

The decision is available here.

Copyright © 2020 Robinson & Cole LLP. All rights reserved.
For more, visit the NLR Communications, Media & Internet section.

Immigration Weekly Round-Up: I-9 Flexibility Rules Extended, Stimulus Aid for Mixed Immigration Status Households

Immigration & Customs Enforcement Extends I-9 Flexibility Rules

U.S. Immigration and Customs Enforcement (“ICE”) has announced that it will extend its flexibilities for compliance with I-9 regulations until at least January 31, 2021, due to the COVID-19 pandemic. The flexibilities in I-9 compliance were set to expire on December 31, 2020.

On March 19, 2020, ICE issued guidance permitting flexibility in several verification rules in order to allow businesses to safely comply with I-9 regulations during the pandemic. Generally, an employer or its representative must personally inspect the employee’s original documentation during the I-9 verification process. Due to concerns about such interactions during the COVID-19 pandemic, ICE announced that businesses operating remotely could instead conduct remote inspections of verification documentation. The guidance also allowed employers to accept expired documentation, such as driver’s licenses, that had been extended automatically by a state or federal agency. Finally, ICE guidance suspended the requirements that employees initiate contact with the Social Security Administration after being notified about a tentative non-confirmation on information contained in the Form I-9.

COVID-19 Stimulus Aid Available for Mixed-Status Families

The new coronavirus relief bill, passed by Congress on December 21, 2020, and signed by President Trump over the weekend, will provide stimulus checks to mixed immigration status families, including those whose undocumented parents or spouses are present in the United States.

These benefits constitute a significant change from the original stimulus package issued earlier this year. The CARES Act, passed in March 2020, did not provide benefits to people with individual taxpayer-identification numbers, or “ITINs,” which are frequently issued to undocumented immigrants who pay taxes but are ineligible for a Social Security number. The CARES Act further denied benefits to spouses who filed taxes jointly with the undocumented individual, so that many American citizens did not receive emergency aid. The new stimulus bill eliminates that provision – although the new stimulus package still excludes aid for those with ITINs, their American citizen family members will now receive emergency benefits, providing benefits to mixed-status households. This will have a substantial impact on millions of individuals; according to the nonpartisan Migration Policy Institute, 3.7 million U.S. citizens and lawful immigrant children reside in mixed-status households, and 1.4 million U.S. citizens or lawful immigrants are married to undocumented immigrants.

©2020 Norris McLaughlin P.A., All Rights Reserved
For more, visit the NLR Immigration section.

Denied Women’s Business Enterprise (WBE) Certification? How to Appeal a WBE Denial Through the Women’s Business Enterprise National Counsel

Women’s Business Enterprise (WBE) Certification could be a valuable tool to help your business access additional opportunities.  This blog post will cover the appeal process for WBE certifications through the Women’s Business Enterprise National Council (WBENC) and its Regional Partner Organizations (RPO).  According to WBENC, its RPOs are authorized to administer the WBENC certification, one of the most well-known WBE certifications, across the United States

In order to obtain WBENC certification, your business must show that it is at least 51 percent owned, controlled, operated, and managed by a woman or women.  The application process involves providing a lot of information and documentation about your business and its owners to the RPO, who will also conduct a site visit (virtually in times of COVID-19).

If your application for WBENC certification is denied, you can either reapply later, or appeal.  There are two levels of appeal.  The first is to the local RPO board.  If you are unsuccessful there, you can appeal to the WBENC Board of Directors.

Below we will outline the appeals process, according to the WBENC Standards and Procedures: see here.

Appeal to the Local RPO Board

The first step in appealing a denial of WBENC certification is to request a meeting with the RPO’s Executive Director or President to discuss the reasons for the denial.  This is for informational purposes only but may give your business an idea of the challenges you may face on appeal.

If you decide to pursue the appeal, you must make a request in writing to the RPO Board of Directors within 30 days of the date of your denial letter.

The RPO Board of Directors will then contact you to schedule an appeal date – if they deem it necessary.  Each RPO will have an Appeals Committee, made up of at least three trained members.  Their decision will be based upon the initial application materials, as well as any requested additional information.  Please note that the committee cannot consider changes in the ownership or control of the business that took place after you requested certification.  Within 30 days of your request, the Appeals Committee will review the file and make a recommendation to the RPO Board of Directors.  If there are new reasons for the denial, you will be notified and given 14 days to respond.

Within 15 days of the Appeal Committee’s recommendation, the RPO Board of Directors will either overturn the denial and grant certification or will uphold the denial.  You will be notified within seven days.

If this appeal results in a denial, your options are to 1) reapply for certification within six months of the date of the original denial, or 2) appeal to the WBENC Board of Directors within 30 days from the date of the appeal letter upholding the initial denial.

Appeal to WBENC Board of Directors

Once WBENC receives your appeal, the President of WBENC will determine, on the basis of information provided by both the appellant business and the RPO, whether there is a reason to evaluate the appeal.  Again, changes subsequent to the initial application will not be considered.

If the President determines that there is insufficient evidence, the denial is upheld, and your appeal is over.

If the President determines that there is evidence for appeal, they will forward it to the Appeals Sub-Committee for review and obtain the original file from the RPO.

The Appeals Sub-Committee will review and make a recommendation to the WBENC Board of Directors within 120 days to either uphold the denial or certify the applicant.  This recommendation will be reviewed by the WBENC Board of Directors, and the President will notify the applicant of the final decision.

If the business is denied, there is no further avenue of appeal. However, the applicant may reapply within six months of the date of the original denial letter.

©2020 Strassburger McKenna Gutnick & Gefsky
For more, visit the NLR Corporate & Business Organizations section.

2021 California Employment Law Roundup

As 2021 is quickly approaching, employers in California are reminded to make any necessary changes to their policies due to the expansion of the California Family Rights Act and other new legislation. We have set forth below a brief summary of some of the key new laws impacting many California employers in 2021.

SB 1383 – Expansion of California Family Rights Act

The current California Family Rights Act (“CFRA”), modeled largely after the federal Family and Medical Leave Act (“FMLA”), requires employers with 50 or more employees to provide protected leave rights to employees with at least one year of service, who have worked at least 1,250 hours during the past 12 months, and who are employed at a worksite with 50 or more employees within 75 miles. However, effective January 1, 2021, SB 1383 eliminates the requirement that employees work at a worksite with 50 or more employees within 75 miles and expands the CFRA to now apply to all private employers with five or more employees. As a result, the CFRA now applies to large and small employers alike with five or more employees, even if the employer only has one employee in California. The CFRA allows employees to take up to 12 weeks of unpaid leave to care for their own serious health condition (other than pregnancy related medical conditions, which are covered under Pregnancy Disability Leave), or to care for a “family member” with a serious health condition, or to bond with a new child within 12 months of the birth, adoption or foster placement of the new child. SB 1383 has now expanded the CFRA to allow protected leave due to a qualifying exigency related to covered active duty of an employee’s spouse, domestic partner, child or parent in the Armed Forces of the United States, as specified in section 3302.2 of the California Unemployment Insurance Code. The definition of “family member” was also expanded to included siblings, grandparents and grandchildren, which is broader than the FMLA, in addition to child, parent, spouse and domestic partner. As a result, it is possible that an employee may qualify for 12 weeks of CFRA leave that is not available under the FMLA, but then still be eligible for 12 weeks of FMLA leave for a different qualifying reason. SB 1383 also repeals the New Parent Leave Act, which allowed employees employed at a worksite with 20 or more employees within 75 miles to take protected leave for the birth, adoption or foster placement of a child. Now, all employees in California working for employers with five or more employees will be eligible for all of the protected leave rights under the CFRA, regardless of the number of employees working within 75 miles. Also, if both parents work for the same employer, both parents can now each take 12 weeks of protected leave to care for a new child, whereas the FMLA allows both parents to only take a combined total of 12 weeks of leave to care for a new child. Additionally, SB 1383 eliminated the highly compensated “key employee” exception to CFRA leave, which is available to employers under the FMLA. Employers of all sizes should review their existing leave policies because small employers who never had to previously comply with CFRA/FMLA leave and large employers who have worksites in California with fewer than 50 (or 20) employees within 75 miles will need to develop policies and procedures for these new leave requirements and provide CFRA leave to all employees in California.

AB 685 – COVID Exposure Notification

As of January 1, 2021, California employers will have new notice and reporting obligations under Cal/OSHA in regard to COVID-19. AB 685 specifically adds section 6409.6 of the Labor Code which requires employers, within one business day, to provide written notice of a potential COVID-19 workplace exposure to all employees, employees’ exclusive representative (such as a union), and employers of subcontractors who were at the same worksite as a “qualifying individual” within the infectious period. The Labor Code defines a “qualifying individual” as any individual who (1) has a positive viral test for COVID-19, (2) is diagnosed with COVID-19 by a licensed health care provider, (3) is ordered to isolate for COVID-19 by a public health official, or (4) has died due to COVID-19. If such qualifying individual has been at the employer’s worksite during the infectious period, the employer must provide written notice in both English and the language that the majority of the workforce understands of the potential COVID-19 workplace exposure. Employers may communicate this written notice by e-mail, text message, or memorandum. The notice must specifically include information regarding COVID-19 benefits under federal, state, or local laws that are available to employees as well as information regarding the employer’s disinfection and safety plan that it plans to implement and complete per the guidelines of the Centers for Disease Control and Prevention. Employers may not reveal the name of the qualifying individual and cannot retaliate against a qualifying individual for disclosing a positive COVID-19 test or diagnosis or order to quarantine or isolate. Lastly, employers are required to maintain records of notifications for at least three years.

Section 6409.6 of the Labor Code further imposes the obligation for employers to report when there has been an outbreak in their workforce. Specifically, if an employer is notified of the number of cases that meet the California Department of Public Health’s definition of a COVID-19 outbreak, the employer must, within 48 hours, notify the local public health agency of the names, number, occupation, and worksite of employees who meet the definition of a “qualifying individual.” The Labor Code exempts health facilities from this reporting requirement.

AB 685 also adds subsection (h) to section 6432 of the Labor Code, which creates an exemption for COVID-19 where Cal/OSHA may issue a citation without having to provide the employer with a standardized form containing descriptions of why it believe there to be a “serious violation” in the place of employment. This expands Cal/OSHA’s discretion by allowing it to shut down a worksite if it deems employees are exposed to COVID-19 so as to constitute an “imminent hazard.”

These COVID-19-specific changes to the Labor Code will remain in effect until January 1, 2023. In preparation to meet these new requirements, employers should prepare a template COVID-19 notice that is ready to distribute, make a list of all employees, unions, or subcontractors that need to be notified, prepare a disinfection or safety plan, and create training and checklists for supervisors and managers covering the new requirements. It is essential for employers to prepare in advance so that they can meet the 24-hour notice requirement in the event there is exposure in the workplace.

SB 1159 – Workers’ Compensation

Having already gone into immediate effect on September 17, 2020, SB 1159 adds Labor Code sections 3212.86 – 3212.88 which expand the definition of “injury” under workers’ compensation to include illness or death from COVID-19. SB 1159 codifies the rebuttable presumption that an employee who reports having COVID-19 is presumed to have contracted the virus at the workplace and is therefore compensable under certain circumstances. The rebuttable presumption applies only if the employee contracted the virus during a workplace “outbreak,” the definition of which varies depending on the number of employees an employer has, and if the employee was present in the workplace within 14 days before the employee tested for COVID-19.

For workers’ compensation injury claims after July 6, 2020, the employer has 45 days from the date of the claim to gather and submit evidence to deny the presumption that the injury is compensable. Employers should act promptly and present evidence that could rebut the presumption. Such evidence could include measures taken by the employer to reduce potential transmission of COVID-19 at the employee’s place of employment and evidence of an employee’s nonoccupational risks of COVID-19 infection.

SB 1159 also requires an employer who knows or reasonably should know that an employee has tested positive for COVID-19 to report certain information to its claims administrator. This notice must be given within three business days and must include the address(es) of the worksite(s) where the employee worked during the 14 days before the positive test, the date of the employee’s positive COVID-19 test, and the highest number of employees who reported to the workplace in the past 45 days. The notice must not include any personally identifiable information regarding the employee who tested positive, unless the employee filed a workers’ compensation claim. Employers can be issued fines of up to $10,000 for failing to report that an employee has tested positive for COVID-19. The changes and requirements under SB 1159 will remain in effect through January 1, 2023.

AB 1867 – Small Employer Family Leave Mediation Program

To help address the expansion of the CFRA to small employers, AB 1867 establishes a mediation program for family care leave claims brought against small employers. The California Department of Fair Employment and Housing (“DFEH”) pilot program will mediate family care leave claims brought pursuant to section 12945.2 of the California Government Code filed against employers with five to 19 employees. Either the employee or the employer may request the mediation. Employees cannot pursue their claim in court until the mediation is completed. This program is set to end on January 1, 2024.

AB 2257 – Worker Classification

Last year, AB 5 codified the “ABC test” adopted by the California Supreme Court in its 2018 decision of Dynamex Operations West, Inc. v. Superior Court, as used to determine worker classification status for claims brought by independent contractors seeking protections under the California Wage Orders, and AB 5 also expanded the ABC test to other aspects of the Labor Code, including for purposes of unemployment insurance and workers’ compensation benefits. AB 5 also set forth numerous occupations that were exempt from the ABC test and instead were governed by the multifactor test based on the California Supreme Court’s 1989 decision in S.G. Borello & Sons, Inc. v. DIR (the “Borello” test), which makes it easier to qualify as an independent contractor than the ABC test.

AB 2257, which went into immediate effect on September 4, 2020, now establishes various modifications to AB 5. AB 2257 not only exempts certain occupations from the ABC test altogether, but also modifies the requirements to make it easier for certain occupations to qualify as exempt under the ABC test. For example, AB 2257 creates exemptions for licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators, while also revising the conditions and criteria pursuant to which business service providers providing services pursuant to a contract to another business are exempt. AB 2257 also established that referral agencies and service providers providing services to clients through referral agencies are exempt. Employers should seek guidance to assess AB 2257’s specific exemptions and its revisions to the conditions, criteria, and applicable definitions for such exemptions to determine whether AB 2257 applies to or affects their business.

SB 973 – Equal Pay Reporting

Employers with 100 or more employees who are required to file an EEO-1 under federal law will now be required to submit a pay data report to the California Department of Fair Employment and Housing (“DFEH”) for the prior calendar year. The first report is due on March 31, 2021, and annually thereafter. Each report submitted by March 31 covers the prior calendar year. The report to the DFEH shall be made available in a searchable and sortable format and must include two categories of information:

(1) The number of employees by race, ethnicity and sex in each of the following categories: Executive or Senior Level Officials and Managers; First or Mid-Level Officials and Managers; Professionals; Technicians; Sales Workers; Administrative Support Workers; Craft Workers; Operatives; Laborers and Helpers; and Service Workers. Employers shall create a “snapshot” by counting individuals in each category from a single pay period of their choosing between October 1 and December 31 of the prior year.

(2) The number of employees by race, ethnicity and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey (https://www.bls.gov/respondents/oes/). Employers shall calculate the annual earnings (defined as W-2 income) and the total number of hours worked by each employee.

AB 1947 – Labor Code Changes

Effective January 1, 2021, section 98.7 of the Labor Code is amended to extend the deadline from six months to one year to file a complaint with the Division of Labor Standards Enforcement (“DLSE”) for discrimination and retaliation claims. This new legislation also makes attorney’s fees recoverable for retaliation claims that are brought under section 102.5 of the Labor Code. This will likely cause an increase in whistleblower claims, especially in response to employees raising complaints about the numerous federal, state and local COVID-19 guidelines.

This article highlights key new laws with broad impact, but employers should be aware that there are other new laws that also may impact them in 2021. We recommend that California employers consult with employment counsel to ensure compliance, as many of these new laws expand the scope of risk for employers and require changes to existing workplace policies and practices.

© 2020 Vedder Price
For more, visit the NLR Labor & Employment section.

2020 In Review: An AI Roundup

There has been much scrutiny of artificial intelligence tools this year. From NIST to the FTC to the EU Parliament, many have recommendations and requirements for companies that want to use AI tools. Key concerns including being transparent about the use of the tools, ensuring accuracy, and not discriminating against individuals when using AI technologies, and not using the technologies in situations where it may not give reliable results (i.e., for things for which it was not designed). Additional requirements for use of these tools exist under GDPR as well.

Legal counsel may feel uncomfortable with business teams who are moving forward in deploying AI tools. It’s not likely, however, that lawyers will be able to slow down the inevitable and widespread use of AI. We anticipate more developments in this area into 2021.

Putting It Into Practice: Companies can use “privacy by design” principles to help them get a handle on business team’s AI efforts. Taking time to fully understand the ways in which the AI tool will be used (both immediately in any future phases of a project) can be critical to ensuring that regulator concerns and legal requirements are addressed.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.
For more, visit the NLR Communications, Media & Internet section.

EPA Revises Lead and Copper Rule for the First Time in Three Decades

On December 22, the U.S. Environmental Protection Agency (“EPA”) finalized long-anticipated revisions to the Lead and Copper Rule—the first major revision since the rule was promulgated in 1991. While the final rule maintains the current lead “action level” of 15 parts per billion (“ppb”) and “maximum contaminant level” goal of zero, it also includes a variety of other revisions that will significantly impact water systems across the nation.

Enhanced Focus on Identifying and Addressing Homes with Lead Service Lines

A major driver behind EPA’s effort to revise the Lead and Copper rule has been identifying and remediating high-risk homes, and in particular, those served with a lead service line (“LSL”). EPA’s final rule thus requires all water systems prepare, and update, LSL inventories. EPA also introduces a requirement to “find and fix” sources of lead in any individual home where a test demonstrates lead levels in excess of 15 ppb. When the “fix” is outside of the water system’s control, documentation must be provided to the state. The final rule further modifies tap sampling procedures and the criteria for selecting homes for sampling to prioritize homes served by LSLs.

Greater Transparency

The final rule also aims to increase transparency by requiring that systems serving greater than 50,000 people post LSL inventories on a publicly-accessible Internet site. In a departure from its initial proposal, EPA reduced the threshold required for water systems to publish their inventory online from 100,000 to 50,000 persons. In addition, the final rule mandates annual notices by water systems to homeowners with LSLs. Certain systems that fail to reach their LSL replacement requirements for a given year must conduct additional outreach in the following year, such as through a townhall meeting. And when any individual tap sample exceeds the lead action level of 15 ppb, systems are now required to notify consumers at the site within 24 hours of learning of the result (instead of the current 30 days).

New Lower “Trigger” for Corrosion Control and Lead Service Line Replacement Actions

The final rule makes changes to the requirements for corrosion control, most notably by establishing a new “trigger” level of 10 ppb. The trigger level is not a health-based standard. At this trigger level, systems that currently treat for corrosion are required to re-optimize their existing treatment, while systems that do not currently treat for corrosion must conduct a corrosion control study. Per EPA’s final rule, water systems must also now conduct outreach and initiate LSL replacement programs when lead levels are above the proposed trigger level of 10 ppb. The final rule requires systems that are above 10 ppb, but at or below 15 ppb, to work with their state to set an annual goal for LSL replacement. Systems that are above the action level of 15 ppb must replace a minimum of three percent of LSLs annually based upon a two-year rolling average.

Testing of Schools and Childcare Centers

EPA’s final rule requires that systems annually test drinking water in 20% of elementary schools and childcare centers in their service areas for a period of five years, and upon request in secondary schools (and elementary schools and childcare centers following the initial five year mandatory testing period). Water systems must provide the results of these tests and information about the actions the school or childcare facility can take to reduce lead in drinking water.

© 2020 Beveridge & Diamond PC
For more, visit the NLR Environmental, Energy & Resources section.

Consolidated Appropriations Act, 2021: Unemployment Relief

The latest round of COVID-19 relief in the Consolidated Appropriations Act, 2021 will revive many aspects of unemployment relief rolled out in the CARES Act in March, although the Act reduces many of the original features.

The Act provides $286 billion for unemployment relief, which includes the following:

  • Reinstates enhanced federal unemployment insurance, providing an additional $300 per week for all workers receiving unemployment benefits through March 14, 2021. This replaces the earlier $600 added subsidy that expired in July.
  • Expands and extends the Pandemic Unemployment Assistance (PUA) program through March 14, 2021. Coverage extends to the self-employed, gig workers, and others in non-traditional employment.
  • Extends the Pandemic Emergency Unemployment Compensation (PEUC) program through March 14, 2021, providing additional weeks of federally funded unemployment benefits to individuals who exhaust their regular state benefits.
  • Increases the maximum number of weeks an individual may claim benefits through regular state unemployment plus the emergency federal programs to a total of 50 weeks.
  • Allows workers who have PUA/PEUC time left on March 14, 2021 (and who remain otherwise eligible) a “transition period” to continue to use the time for an additional three weeks, through April 5, 2021.
  • Affords states options for retaining an individual’s 2020 weekly benefit amount through March 14, 2021, ensuring that individuals will continue to receive maximized state benefits through the duration of PUA/PEUC as the new benefit year rolls in.

The Act also includes a technical amendment that confirms that shared work plans qualify as unemployment benefits for purposes of the $300 subsidy payment. For new filers, some states may reinstate the waiting week for receipt of benefits, as the Act reduces reimbursement from 100% to 50%.

Jackson Lewis P.C. © 2020
For more, visit the NLR Labor & Employment section.

Congress Passes COVID-19 Relief and Stimulus Package

On Monday, December 21, Congress enacted a $900 billion stimulus package to support American workers and businesses impacted by COVID-19. The measure represents a last-minute bipartisan agreement by a lame duck Congress to provide much-needed support as COVID-19 cases continue to rise across the country. Notably, the bill does not include funding to states and local governments, and does not provide any liability protections for businesses related to COVID-19. Those are issues favored by Democrats and Republicans respectively, and were dropped in the compromise.

The legislation includes funding for individual stimulus checks, a restart and expansion of the popular Paycheck Protection Program (PPP) (including clarification that business expenses paid with PPP loan funds are tax deductible), other new and expanded SBA loan programs, direct targeted funding to certain industries, unemployment compensation program extensions, payroll and other tax credits and deductions. The overall legislation will take effect when signed, but individual programs and provisions may have unique effective dates that are separate from the general effectiveness date.

While President Trump has until December 28 to sign the legislation into law, on Tuesday evening, December 22, he called upon Congress to enact an amendment to increase the amount of payments to individuals from $600 to $2000.  He has also expressed discontent with other provisions of the bill, causing some uncertainty as to whether he will sign it or force Congress to take further action.

​Given this uncertainty, we recognize that certain provisions of the bill may change. However, we know that these Congressional stimulus and relief efforts are of great interest to our clients, and we will continue to keep you apprised of any changes to the legislation and its final outcome. The following summaries are based on the version of the law enacted by Congress on December 21.

For a comprehensive review of these provisions and more, please see the following Pierce Atwood alerts:

Business and Tax Relief – including the PPP, other SBA lending, targeted financial aid to certain industries, and payroll and business tax credits and deductions.

Energy Investment Stimulus – including clean energy reforms, research and development, and extension and enhancement of renewable energy tax credits.

Individuals, Families and Workers Relief – including direct stimulus payments and unemployment programs.

Health Care Providers, Patients, COVID-19 Mitigation, and Vaccination – including additional grant money for providers, ending surprise medical billing, and additional support for COVID-19 mitigation.

©2020 Pierce Atwood LLP. All rights reserved.
For more, visit the NLR Election Law / Legislative News section.

The Show Must Go On: Stimulus Package Provides Relief for Venue Operators

An important aspect of the new stimulus package passed by Congress is Section 324 of the Additional Coronavirus Response and Relief Act entitled “Grants for Shuttered Venue Operators.” Section 324 is intended to provide relief to live Venue Operators and promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theater operators and talent representatives (collectively “Venue Operators”). Incredibly, while the earlier versions of the stimulus package provided for $10 billion in relief for Venue Operators, the final version provided for $15 billion in relief for this group.

Under Section 324, Venue Operators can apply for non-repayable, two-part grants that cover up to 45 percent of a Venue Operator’s 2019 revenue, capped at $10 million in the first round of grants, which is followed by a supplemental grant in spring 2021 that can be valued up to 50 percent of the original grant. The general requirements to qualify for the two-part grants are that the applicant must have been in business on February 29, 2020, and must show 2020 revenue decline by at least 25 percent. Importantly, the funds for the first part of the grant will become available quickly, with priority given to Venue Operators that experienced revenue losses in 2020 in the range of 70 to 90 percent.

For an operator to qualify as a Venue Operator for purposes of relief, the operator must have mixing equipment as well as a public address system and lighting rig. Further, the operator must sell paid tickets or have a cover charge “to attend most performances” so that “artists are paid fairly and do not play for free or solely for tips except fundraisers or similar charitable events.”

Venue Operators that receive grant funds may use the funds for payroll costs, rent obligations, utility payments, mortgage obligations, the payment of principal and interest on debt incurred prior to February 15, 2020, covered worker protection expenditures, payments to independent contractors, and ordinary and necessary business expenses. Any applicant receiving the grant funds will be required to maintain four years of employment records after receiving the funds and three years of all business records.

© 2020 Much Shelist, P.C.
For more, visit the NLR Entertainment, Art & Sports section.

The U.S. Department of Justice Releases its Cryptocurrency Enforcement Framework

Earlier this year, the U.S. Department of Justice (“DOJ”) released its highly anticipated Cryptocurrency Enforcement Framework (the “Framework”).  The Framework was developed as part of the Attorney General’s Cyber-Digital Task Force, and contains three sections:  (1) Threat Overview; (2) Law and Regulations; and (3) Ongoing Challenges and Future Strategies.

The “Threat Overview” section details various illicit uses of cryptocurrency and highlights how criminals increasingly have used cryptocurrency to fund illicit and illegal activities, including purchasing and selling illegal drugs and firearms, funding terrorist organizations, laundering money, and engaging in other illegal activities on the dark web.  The Framework also discusses how hackers have targeted cryptocurrency marketplaces for theft and fraud activities.

The “Law and Regulations” section of the Framework details the existing statutory and regulatory framework that DOJ and others have used and can use to regulate cryptocurrency.  As the Framework explains, DOJ is not the only enforcement actor in this space, and many other agencies – including, among others, the U.S. Treasury Department, the Securities & Exchange Commission, the Commodity Futures Trading Commission, and the Internal Revenue Service – have been actively enforcing violations by criminal cyber actors.  While the Framework is generally supportive of a broad, multi-pronged enforcement landscape, it highlights the difficulty of tracking and complying with an increasingly complex web of regulations created by these various agencies.

The third and final section of the Framework discusses current challenges and strategies for future enforcement.  This section notes the inherently decentralized and cross-border nature of cryptocurrency, and the problems it poses for enforcement.  Though the global nature of cryptocurrency might complicate investigations, the Framework makes clear it will not hinder DOJ’s willingness or ability to prosecute cases, stating, “The Department also has robust authority to prosecute VASPs [Virtual Asset Service Providers] and other entities and individuals that violate U.S. law even when they are not located inside the United States.  Where virtual asset transactions touch financial, data storage, or other computer systems within the United States, the Department generally has jurisdiction to prosecute the actors who direct or conduct those transactions.”  The enforcement section emphasizes the Bank Secrecy Act (BSA) and Anti Money Laundering (AML) laws as primary tools of enforcement, particularly for actors who deal with “anonymity enhanced cryptocurrencies” and technology that obscures the ownership of particular assets.  The report stresses that obligations to safeguard systems, protect consumer data, and properly maintain customer information apply not only to conventional virtual asset exchanges, but also to peer-to-peer exchanges, kiosk operators, and virtual currency casinos.

The DOJ released the Framework at a time when interest in cryptocurrency is at an all-time high.  Bitcoin passed $20,000 recently, and the record-setting level is a clear indication of increased interest in the major digital asset.  Cryptocurrencies continue to attract an increasing number of investors, including well-known companies and fund managers.  Further, the CME announced plans to expand its cryptocurrency offerings by adding Ether futures to its existing Bitcoin futures, while the CBOE recently announced plans to launch indexes tied to various digital assets in early 2021.  The Framework represents a clear indication from the DOJ that it is focused on cryptocurrency-related crimes.  Individuals and companies seeking investment or exposure to the cryptocurrency market should review their compliance obligations in light of the Framework, and ensure any deficiencies are resolved quickly.

Commentators have noted the Trump administration’s aggressive stance towards cryptocurrency, and the Framework certainly tracks that stance.  Of course, it remains to be seen whether the Biden administration will continue to take such an aggressive enforcement posture in the cryptocurrency space.  Some commentators have noted that they expect that the Biden administration will be different.  Notably, Mr. Biden has chosen Gary Gensler to lead his financial policy transition team, and Mr. Gensler has been supportive of cryptocurrencies in past writings.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.
For more, visit the NLR Communications, Media & Internet section.

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