New Presidency Will Compel Action in Key Areas of Health Care in 2017

health careAs we enter the final stretch of the U.S. presidential election, health care remains one of the most contested issues with great potential for change, particularly to existing insurance and patient care systems. Compounding matters is the opening of enrollment season for exchange plans, which places the already hotly debated Affordable Care Act (ACA) at the forefront of the national health care discussion.

Former U.S. Congressman Dennis Cardoza, co-chair of Foley’s Federal Public Affairs Practice, and Public Affairs Director Jennifer Walsh opined recently about how our next president could symbolically break the congressional logjam on several health care-related fronts and why the industry is poised for more market-driven disruption.

What follows are a few highlights of their conversation.

1. What health policy issues will be most impacted by the next administration?

Cardoza: Since the passage of the ACA, there has been very little legislative activity when it comes to health care, as everything has been done at the administrative level and spread across various departments. During the honeymoon period that follows every newly elected president, we’ll likely see an immediate and significant push around the ACA marketplaces, especially in light of some high-profile defections, decreasing competition and increasing premiums. It doesn’t matter who is in the White House; there are things happening in the market that can’t be ignored.

Walsh: I agree that legislation concerning the exchanges will be the first out of the gate. There is a strong impetus to fix the system, but it may happen initially as part of the reauthorization of the Children’s Health Insurance Program (CHIP) that is set to expire in 2017. CHIP is a bi-partisan issue and no one wants to see it lapse. This must be passed in the first or second-quarter and could grease the skids for other ACA measures that are either attached as amendments or follow in subsequent bills.

On a separate, simultaneous track, drug pricing will continue to be scrutinized. Lawmakers will pick up where they left off leading up to the August recess. It’s now part of the national dialogue and lawmakers will continue to discuss how to address the issue.

2. Will merger activity continue on its current, accelerated pace?

Cardoza: The ACA has forced market consolidation due to everyone’s ability, or rather inability to compete over costs. We may see other large insurance plans leave the exchanges if the Department of Justice doesn’t approve their respective mergers.

Walsh: Mergers have been an interesting consequence of the ACA, and we’ll see more alignment in this regard. They don’t always generate big news headlines, but smaller acquisitions of technology assets and payments systems are happening all over, so health care organizations can build their portfolios.

3. What are some other noteworthy developments you’re watching closely?

Cardoza: Concluding a long, iterative process, the Centers for Medicare & Medicaid Services will soon be rolling out its new health care payment and service delivery models as part of the transition from fee-for-service. Next year will be a key period as we work toward full-blown implementation of new reimbursement practices that reflect better value and promote quality care for patients.

Walsh: The 21st Century Cures Act, which is Representative Fred Upton’s legacy issue, has received broad bipartisan support and already passed the House. It will allocate more funding to the National Institutes of Health to explore new cures and treatments, and incent to innovative approaches to disease management. It should get a fair shake in 2017, if not during the upcoming lame duck session.

4. What should health care executives be thinking about heading into 2017?

Cardoza: Complacency has set in with the Washington gridlock, and many executives with bearish outlooks have accepted the broken system and are merely just controlling costs. However, they need to change their mindset and be more cognizant of what could soon affect their business, as we’re about to enter a transformative year where there will be a lot of moving parts. If they’re not informed and engaged, they’re going to get left behind.

Walsh: The uncertainty surrounding the ACA has certainly caused a lot of angst, and makes planning for businesses extremely difficult. Companies need to channel that energy into advocacy for their organization. Although every system is different, the industry-wide movement toward modernization, value, and quality will affect all parties. While it will be incremental, the change that will be prompted by the election is inevitable.

© 2016 Foley & Lardner LLP

U.S. Election Forecast on Congressional Leadership Changes

2016 presidential electionWith the election less than a week away, we conducted in-depth analysis of possible House and Senate committee leadership changes, including committees that effect energy technology policies. Leadership of a number of House and Senate committees is bound to change due to term-limits, retirements, and perhaps election results, including the Energy and Commerce and Natural Resources House committees, and the Energy and Natural Resources and Environment and Public Works Senate committees. We have outlined those potential changes in either a Republican- or a Democratic-controlled House and Senate. To read more about these potential Congressional leadership changes, read on!

Among Republicans on the House Energy and Commerce committee, Rep. John Shimkus (IL) and Rep. Greg Walden (OR) are expected to run for Chair/Ranking Member because Rep. Fred Upton (MI) is term-limited. Rep. Shimkus has more seniority on the committee than Rep. Walden, but Walden is completing his second term leading the Republican National Congressional Committee. Both are well-liked within the Republican Caucus and are adept fundraisers. Rep. Joe Barton (TX) has the most seniority on the committee and could also choose to run for Chairman or Ranking Member. Sources are indicating that should the Democrats gain control of the House, Rep. Barton would be less interested in running for Ranking Member. Additionally, Rep. Barton is already term-limited as the top Republican on the committee and would have to seek a waiver to serve as the next Chair or Ranking Member. On the Democrats’ side, Rep. Frank Pallone (NJ) would likely remain the Ranking Member if the Republicans control the House and would likely become Chairman if the Democrats control the House.

On the House Natural Resources committee, Republican Rob Bishop (UT) would likely remain the Chairman if the Republicans control the House and would likely become the Ranking Member if the Democrats took control. For the Democrats, Rep. Raul Grijalva (AZ) could remain the Ranking Member if the Republicans retain the House and could become Chairman if the Democrats win control. However, Rep. Grijalva could choose to run for Chair/Ranking Member of the Education and the Workforce Committee if Rep. Bobby Scott (VA) is appointed to the Senate to replace Vice Presidential candidate Tim Kaine. It is unclear who would run for or become Chair/Ranking Member of Natural Resources in that scenario.

In the Senate, Republican Sen. Lisa Murkowski (AK) would likely remain Chairwoman of the Energy and Natural Resources committee if the Republicans win the Senate. However, if the Democrats control the Senate, Sen. John Barrasso (WY) could become the Ranking Member because Sen. Murkowski is term-limited as Ranking Member of Energy and Natural Resources. Sen. Barrasso could also choose to become the Ranking Member of Environment and Public Works, in which case, Sen. Jim Risch (ID) could become the Ranking Member of Energy and Natural Resources. However, sources are indicating that Sen. Barrasso, who represents a Western coal state, would likely choose to become the Ranking Member of Energy and Natural Resources, in part because it would allow Sen. Shelley Moore Capito (WV), a rising female star in the GOP who hails from an Eastern coal state, to become the Ranking Member of Environment and Public Works. For the Democrats, Sen. Maria Cantwell (WA) would likely remain the Ranking Member if Republicans remain in control or become the Chairwoman for Energy and Natural Resources if the Democrats win the Senate. Though highly unlikely, there is a scenario in which, Sen. Jack Reed (RI) becomes the Chair/Ranking Member of Appropriations and Sen. Bill Nelson (FL) then takes over as Chair/Ranking Member of Armed Services. In that unlikely case, Sen. Cantwell could choose to become the Chair/Ranking Member of Commerce, opening up the top Democratic slot on Energy and Natural Resources to Sen. Bernie Sanders (VT). (Sen. Ron Wyden (OR) would be next in line after Sen. Cantwell on Energy and Natural Resources, but Sen. Wyden will remain the Chair/Ranking Member of Finance.)

Among Republicans on the Senate Environment and Public Works committee, Sen. Barrasso could become the Chairman because Sen. James Inhofe (OK) is term-limited as Chairman and Sen. David Vitter (LA) is retiring. If the Democrats control the Senate, Sen. Barrasso could become the Ranking Member because Sen. Inhofe is again term-limited and Sen. Vitter is retiring. However, as discussed above, Sen. Barrasso would likely choose to become the Ranking Member of Energy and Natural Resources, in which case Sen. Capito could become the Ranking Member of Environment and Public Works. For the Democrats, if the Republicans or Democrats control the Senate, Sen. Tom Carper (DE) could become Chair/Ranking Member of Environment and Public Works because Sen. Barbara Boxer (CA) is retiring. According to sources, Sen. Carper is indeed preparing to take over as the top Democrat on this committee. However, Sen. Carper could choose to remain the Chair/Ranking Member of Homeland Security, in which case Sen. Ben Cardin (MD) could become the Chair/Ranking Member of Environment and Public Works. Sen. Cardin could also choose to remain the Chair/Ranking Member of Foreign Relations unless Sen. Robert Menendez (NJ) is cleared of ethics violations and is reinstated, which is unlikely in the near future. If Sen. Cardin remains the Chair/Ranking Member of Foreign Relations, which is nearly certain as long as Sen. Menendez is under indictment, Sen. Sanders could become the Chair/Ranking Member of Environment and Public Works.

 

©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Samsung Recalls Expanding to China After Consumer and Media Complaints

smartphone Samsung recallSamsung’s much-publicized recall of the new Samsung Galaxy Note7 phones due to alleged fire hazards of lithium-ion batteries started in North America. Within weeks, after a media and social media outcry in China, the company expanded the recall to cover consumers in China. Samsung’s decision to expand the recall to cover consumers in China echoes the recent experience of other major international brands involved in high-profile consumer product recalls, and illustrates a longstanding challenge and two emerging trends. First, it has long been difficult to identify what, if any, defect a consumer product poses when presented with experience data suggesting a hazard may exist. Second, in the “no good deed goes unpunished” category, is the increasing risk that swift direct communications to U.S. consumers about a potential risk – which is not prohibited in any way by the U.S. Consumer Product Safety Act (CPSA) – will result in a public backlash by regulators complaining about a “go it alone” strategy when a company acts unilaterally. Third is the growing power of the consumer movement in China. All of these factors illustrate the need to consider a holistic global notification and recall strategy. Accordingly, today’s product recall landscape has become far more complex.

The path to the Samsung recall of the Galaxy Note7 began shortly after the devices were made available for sale on August 19, 2016. Reports quickly began coming in concerning overheating of the phone’s battery, including reports of injuries and fires. By September 2, Samsung had received enough reports in North American and other markets to publicly announce a unilateral partial recall of Galaxy Note7s sold in those markets. This initial announcement was not issued in the usual form of a joint press release in cooperation with the U.S. Consumer Product Safety Commission (CPSC) or other safety agencies. Although recalling a product without CPSC agreement is entirely legal, the CPSC strongly prefers to negotiate with companies over the terms of their voluntary recalls, and can force mandatory recalls if it deems companies’ actions insufficient. The sale of products covered by a recall – including products recalled voluntarily – is also a violation of the law, and CPSC immediately criticized Samsung for the unilateral action.

A traditional formal recall announcement of covering some Galaxy Note7 units was subsequently issued by Samsung, CPSC, Health Canada, and Profeco (Mexico’s Procuraduría Federal del Consumidor) on September 15. Reports of overheating and fires associated with additional units not included in the recall continued to come in, however, as well as reports associated with replacement units. This led the company to expand its recall to cover all Galaxy Note7s on October 13.

Meanwhile, in China, Samsung announced only a limited recall of 1,858 units on September 14. The company justified the narrow recall by pointing to the different batteries used in Chinese units, asserting that the only affected units were pre-sale samples offered to a limited universe of consumers. Reports spread in the Chinese news and social media about the breadth of recalls in North America, and Chinese users posted photos and videos in social media showing the phones failing (“exploding,” as the consumers described them) in China. Samsung disputed some of those reports. The official state-run broadcaster, China Central Television (CCTV), however, castigated the company, asking “[i]f Samsung continues to violate the legitimate rights and interests of Chinese consumers and continues to refuse to make public the samples used in its testing process as well as the process itself, who would be able to help Chinese consumers find the truth?” Critiques also came in from other government-associated media sources. After the Chinese consumer product agency, General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) received about 20 reports of overheating, Samsung recalled its Chinese units on October 11, just before recalling all units worldwide and cancelling the Galaxy Note7.

When user reports of batteries overheating began coming in after the Galaxy Note7 was launched, Samsung reportedly began an immediate investigation. Conducting a sound product-safety root-cause analysis is hard. Samsung appears to have opted to make a public announcement about the potential battery issue based on its initial assessment of the cause of the issue. Its actions in publicly notifying consumers were clearly motivated by an interest in advancing consumer safety by a swift public notice. But further reports involving replacement batteries and criticism by CPSC for the firm’s unilateral action in notifying the public illustrate the conundrum that consumer product firms face every day: It is hard to balance the need to precisely identify potential safety issues (and notify regulators about them) with a desire to quickly advise the public about potential safety concerns.

Global interconnectedness, including through the internet and social media, complicate the situation further. National recalls can easily become international recalls. Although there is little evidence, to date, that pushing recalls on social media meaningfully improves recall response, there is no question that Chinese consumers are turning to social media to pressure global businesses to recall products in China when those products are recalled elsewhere. Ironically, after years of Chinese exports being called into question by recalls in the U.S., Europe, and elsewhere, Chinese consumers are insisting that the products sold in the Chinese market must be held to safety standards applicable elsewhere, and that Chinese consumers be offered equivalent remedies.

In today’s fast-paced social medial environment, consumer product companies must carefully consider not only the facts on the ground and the legal framework, but also the potential social media scrutiny and resulting implications of regionally limited recalls for globally distributed products. There may well be excellent safety arguments that justify not recalling products everywhere, but in today’s environment, decisions to limit recalls to specific jurisdictions require a strong basis of support and considerable on-the-ground effort to work with regulators and understand the market dynamics.

ARTICLE BY David J. EttingerSheila A. Millar & Jean-Cyril Walker of Keller and Heckman LLP

US Voting Leave Laws: What Employers Need to Know

US Voting Leave LawsWith the general election days away, employers should familiarize themselves with their state’s voting leave laws.

Voting leave laws vary across the country. A number of states, however, do not have specific laws permitting time off to vote. These states include: Connecticut, Delaware, Florida, Idaho, Indiana, Louisiana, Maine, Michigan, Mississippi, Montana, New Hampshire, New Jersey, North Carolina, Oregon, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, Washington, and the District of Columbia.

Generally, states with voting leave laws grant an employee two hours off work, in order to vote, without experiencing loss of pay. An employee who has sufficient hours to vote outside his or her working hours is generally not eligible to take time off work to vote without experiencing loss of pay. Some states may fine employers who violate an employee’s statutory right to take time off work to vote.

Below is a summary of states’ voting leave laws:

Alabama: An employee may take up to one hour off work to vote, upon reasonable notice to his or her employer, unless the employee’s hours of employment begin at least two hours after the polls have opened or end at least one hour before the polls close. The employer may specify the hours when an employee may take off work to go vote. (Code of Ala. § 17-1-5)

Alaska: An employee may take off as much working time as necessary to vote, without loss of pay. If, however, an employee’s working hours begin either two hours after the polls have opened or two hours before the polls close, the employee is considered to have sufficient time outside working hours within which to vote and may not take time off to vote without incurring loss of pay. (Alaska Stat. § 15.15.100)

Arizona: An employee may take time off work to vote, upon notice to the employer prior to election day, if there are less than three consecutive hours between the opening of the polls and the beginning of the employee’s work shift or between the end of the employee’s work shift when the difference between work shift hours and opening or closing of the polls provides a total of three consecutive hours. The employee shall not experience loss of pay for work time taken to vote and the employer may specify the hours when an employee may take off to vote. Employers refusing an employee’s right under this statute or subjecting an employee to a penalty or reduction of wages is guilty of a class 2 misdemeanor. (A.R.S. § 16-402).

Arkansas: Employers must schedule employees’ work hours in such a way that each employee has an opportunity to go vote. An employer’s failure or refusal to comply with this statute may result in a fine of no less than $25 and no more than $250. (A.C.A. § 7-1-102).

California:  An employee without sufficient time outside working hours may take off as much time as necessary at the beginning or the end of a work shift in order to vote. An employee may not lose pay for less than two hours taken off to vote. (Cal. Elec. Code § 14000).

Colorado: With notification to the employer prior to Election Day, an employee may be absent from work for up to two hours in order to vote without incurring loss of pay. The employer may specify the hours when the employee may be absent, but the employee may request that the hours be at the beginning or end of the work shift. An employee with three or more off-duty hours between the time of opening and closing of the polls may not take time off work to vote without incurring loss of pay. (C.R.S. 1-7-102).

Georgia: Upon reasonable notice to the employer, an employee may take off up to working hours to vote unless the employee’s working hours beginning at least two hours after the opening of polls or end at least two hours before polls close. The employer may specify during which hours an employee may take off work to vote. (O.C.G.A. § 21-2-404).

Hawaii: An employee may take off work up to two hours to vote without incurring loss of pay. If an employee fails to vote after taking time off for that purpose, the employer, upon verifying that fact, may deduct appropriate wages or salary from the employee for the period during which the employee was absent from employment for purposes of voting. An employer who refuses an employee’s privileges conferred by this statute may be subject to a fine of not less than $50 and not greater than $300. (HRS § 11-95).

Illinois: Upon notice to an employer prior to Election Day, an employee may take off up to two hours from work to vote without loss of pay if the employee’s working hours begin less than 2 hours after polls open and less than 2 hours before polls close. The employer may specify the hours when the employee may take off work to vote. (10 ILCS 5/17-15).

Iowa: With a written request made prior to Election Day, an employee, without three consecutive off duty hours between the time of the opening and closing of polls, may take such time off work as necessary to grant the employee a total of three consecutive hours to vote, without loss of pay. (Iowa Code § 49.109).

Kansas: An employee may be absent from work for no more than two consecutive hours between the time of opening and closing of polls. If polls are open before the employee is scheduled to begin work or after ending work, but the period of time the polls are open is less than two consecutive hours, then the employee can only take off as much time to grant the employee two consecutive hours to vote. (K.S.A. § 25-418).

Kentucky: An employee, having applied for leave prior to Election Day, may take up to four hours off work, between the time of opening and closing the polls, to vote without loss of pay. The employer may specify the hours during which an employee may take off work to vote. (KRS § 118.035).

Maryland: An employee may take up to two hours off work to vote if the employee does not have two continuous off-duty hours during the time that polls are open. The employer shall pay the employee for up to two hours taken off work to vote. (Md. Election Law Code Ann § 10-315).

Massachusetts: An employee in a manufacturing, mechanical, or mercantile establishment may take time off work during the two hours after the opening of polls, upon application for leave of absence during such period. (ALM GL ch. 149 § 178).

Minnesota: An employee may be absent from work for the time necessary to cast a ballot and return to work on that same day without loss of pay. An employer hindering an employee’s right under this statute is guilty of a misdemeanor. (Minn. Stat. § 204C.04).

Missouri: Upon request made prior to Election Day, an employee may take off three hours from work between the time of opening and the time of closing the polls for purposes of voting. The employer may specify the hours when the employee may take off work to vote. (§ 115.639 R.S. Mo.).

Nebraska: An employee who does not have two consecutive off-duty hours in the period between the time of the opening and closing of the polls may take off work two consecutive hours to cast a ballot and without loss of pay. The employer may specify the hours during which the employee may take off work to vote. (R.R.S. Neb. § 32-922).

Nevada: If it is impracticable for an employee to vote before or after his or her hours of employment, an employee may be absent from his or her place of employment at a time designated by the employer to provide for enough time to vote. An employee shall not experience loss of pay for time taken off to vote. (Nev. Rev. Stat. Ann. § 293.463).

New Mexico: An employee may take off work up to two hours for the purpose of voting without loss of pay unless the employee’s work shift begins two hours after polls open or ends three hours before polls close. An employer refusing an employee’s right granted by this statute is guilty of a misdemeanor and may be punished by a fine not less than $50 and not more than $100. (N.M. Stat. Ann. § 1-12-42).

New York: An employee without four consecutive off-duty hours either between the opening of the polls and the beginning of his or her working shift, or between the end of his working shift and the closing of the polls, may take as much time off from work to vote. An employee may take off up to two hours of work without loss of pay. An employee seeking to take time off work to vote must notify the employer between two to ten days before the election requiring time off work. No less than ten working dates before an election, employers must post in the workplace a conspicuous notice notifying employees of their rights under the statute. Such notice shall be posted until the close of polls on Election Day. (NY CLS Elec § 3-110).

North Dakota: Employers are encouraged, but not required, to establish a program to grant employees time off work to vote when the employee’s regular work schedule conflicts with the polls opening and closing time. (N.D. Cent. Code, § 16.1.01-02.1).

Ohio: Employers cannot discharge or threaten to discharge an employee for taking a reasonable amount of time off work to vote on Election Day. An employer who violates this section may be fined not less than $50 and no more than $500. (ORC Ann. 3559.06).

Oklahoma: Upon oral or written notice by the employee prior to Election Day, an employer must grant an employee two hours off from work, during the period when polls are open, to allow the employee to vote. The employer may select and notify the employee of the work hours that may be taken off to vote. Employees taking time off work to vote shall not experience loss of pay or other penalty, for such absence. An employer failing to comply with this statute may be guilty of a misdemeanor and may subject to a fine between $50 and $100. (26 Okl. St. § 7-101).

South Dakota: An employee without two consecutive off duty hours during the time polls are open may take off two hours from work in order to vote without loss of pay. The employer may specify the hours during which the employee may take off work to vote. An employer refusing an employee’s right under this section is guilty of a Class 2 misdemeanor.

Tennessee: An employee, upon notice to the employer before noon of the day before Election Day, may take off three hours from work during the time the polls are open, without loss of pay, in order to vote, unless the employee’s work shift begins three hours after polls open or ends three hours before polls close. The employer may specify the hours during which the employee may be absent. (Tenn. Code Ann. § 2-1-106).

Texas: An employer may not bar an employee from taking time off from work on Election Day for the purpose of voting. An employer in violation of this statute may be guilty of a Class C misdemeanor. (Tex. Elec. Code § 276.004).

Utah: Upon application prior to Election Day, an employer must allow an employee to take off from work up to two hours, between the time the polls open and close, in order to vote upon. An employee who has three or more consecutive off duty hours between the times polls open and close is not eligible to take time off work under this statute. An employer violating an employee’s rights under this statute is guilty of a class B misdemeanor. (Utah Code Ann. § 20A-3-103).

West Virginia: Upon written request made to the employer at least three days prior to Election Day, an employee may take off up to three hours from work in order to vote. An employee shall not experience loss of pay for time taken off work to vote. An employee with three or more off duty hours between the hours of the opening and the close of polls on Election Day may not take time off work to vote without loss of pay. (W. Va. Code § 3-1-42).

Wisconsin: Upon notification to the employer prior to Election Day, an employee may take off up to three hours from work to vote. The employer may specify the hours when the employee may take off work to vote and the employee shall not experience loss of pay. (Wis. Stat. § 6.76).

Wyoming: An employee may take off one hour from work in order to vote without loss of pay. (Wyo. Stat. § 22-2-11).

Litigation for Non-Litigious Company [VIDEO]

Press Millen and Sonya Pfeiffer examine how in-house counsel, CEOs, and other executives can prepare for litigation and avoid litigation mistakes that may prove costly. The eight pitfalls of litigation that companies want to avoid are laid out in this episode.

Press Millen is a veteran of complex commercial litigation, with particular experience in antitrust, unfair trade practices, trade secrets, confidentiality and IP cases. Press also is a frequent author, blogger and speaker on trade secrets issues.

Copyright © 2016 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.

The 2016 U.S. Presidential Election; Brexit West?

brexit westIt is hard to overstate the political and policy parallels between the recent UK “Brexit” vote to leave the European Union (“EU”) and the pending U.S. presidential election.  Both cases reflect the significant tensions between globalism and national sovereignty, as well as the competing ideologies of capitalism and what might be described as European corporatism.  The narrowly-decided Brexit vote can be viewed as a reassertion of national sovereignty, reflecting deep political divisions and concerns about economic dislocation, immigration, and national security.  Similar political forces in the U.S. have given rise to the unlikely presidential candidacy of Donald Trump.

Regardless of the outcome of the November 8 election, these underlying political forces will continue to shape public policy on both sides of the Atlantic.  With respect to Brexit, the UK Prime Minister Theresa May recently revealed that she will trigger Article 50 of the Lisbon Treaty no later than the end of March 2017.  Recent statements suggest that the United Kingdom may force a “hard Brexit,” i.e., leaving the EU within two years and without the framework for the future relation with the EU being agreed upon.  In other words, the pace of fundamental policy changes could be much faster than many observers currently anticipate.

Importantly, domestic policy outcomes will depend, to unprecedented extent, on discussions that will occur at an international level.  Understanding these dynamics will be the key to successful strategies for favorably influencing policy outcomes in Brussels, London, and Washington, DC.  This analysis briefly touches on some of the key policymakers who will shape the complex interplay between the U.S., the UK, and the EU, demonstrating that a government relations function will be an important facet on every successful strategic business plan.

United Kingdom

Theresa May, United Kingdom Prime Minister

As leader of a Conservative UK government, Theresa May will play an integral role in setting the tone on the UK side of the Brexit negotiations.

Rt. Hon. David Davis, MP and Secretary of State for Exiting the EU

David Davis will manage policy decisions in the Brexit negotiations and work to establish the future relationship between the EU and UK.

Oliver Robbins, Permanent Secretary for the Department of Exiting the EU

Oliver Robbins will be responsible for supporting the newly-formed Department of Exiting the EU in the Brexit negotiations.

Rt. Hon. Liam Fox, MP and Secretary of State for International Trade

Liam Fox will develop and negotiate free trade agreements with non-EU countries.

Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board

Mark Carney will set policy for the Bank of England and will attempt to mitigate shocks to the UK economy throughout the negotiations (his term was recently extended until mid-2019).

European Union

Jean-Claude Juncker, President of the European Commission

Jean-Claude Juncker will head the European Commission and will set policy for the EU in the Brexit negotiations

Michel Barnier, Chief EU Negotiator

Michael Barnier, former-European Commissioner for Internal Market and Services, will lead the Brexit negotiations for the EU.

Didier Seeuws, Official Negotiator for European Council

Didier Seeuws will lead a “Brexit taskforce” of EU negotiators that will focus on technical issues of the treaty negotiations.

Guy Verhofstadt, Member of the European Parliament and European Parliament Brexit Negotiator

Guy Verhofstadt will represent the European Parliament in the Brexit negotiations.

Mario Draghi, President of the European Central Bank

Mario Draghi and the European Central Bank will likely act in an advisory capacity for the EU during the Brexit negotiations.

United States

Considering Hillary Clinton’s and Donald Trump’s opposing views on the government’s role in the financial system, the outcome of the U.S. election will likely impact the ongoing global regulatory tension between market-based capitalism and state-based corporatism.  Moreover, the U.S. plays a key role on such international bodies as the G20, the Financial Stability Board (“FSB”), International Organization of Securities Commissions, and Basel Committee on Banking Supervision, which will serve as echo chambers as the new bilateral and multilateral agreements are negotiated.

Hon. Hillary Clinton, Democratic Presidential Nominee

Hillary Clinton will draw on her experience as Secretary of State as the U.S. reacts to Brexit negotiations.  A Clinton Administration will be much more inclined to embrace the trend that emerged after the 2008 financial crisis of greater international cooperation on financial regulation.  A likely hallmark of Hillary Clinton’s approach is an emphasis on collaborating with international economic powers to reduce risks to the stability of the global financial markets.  In this regard, a Clinton Administration will probably be receptive to engaging international regulatory bodies on heightened global capital requirements for financial institutions and on more stringent margin and collateral rules for securities and derivatives transactions.  Additionally, Hillary Clinton has advocated in favor of international regulations for resolving globally active financial institutions that could pose a risk to the financial system and called for an expansion of the authority of regulators to police financial market activity, including providing them additional authority to address risky activity in the “shadow banking” sector.

Donald Trump, Republican Presidential Nominee

If Donald Trump wins the election, his nationalistic policy agenda will probably place far less emphasis on international financial regulation.  More specifically, a Trump Administration will likely shun the macro-prudential framework set forth by the FSB and the G-20.  A Trump Administration may also revisit financial markets regulation with an eye toward U.S. competitiveness.  While the Republican Party platform included a provision calling for the resurrection of the Glass-Steagall Act, Republicans are unlikely to pursue this as a policy objective.  More likely, the House Republican financial reform proposals, principally House Financial Services Committee Chairman Rep. Jeb Hensarling’s (R-TX) Financial CHOICE Act, will be the foundation for any financial reforms in a Trump Administration.

What Can Be Done?

These turbulent times will produce winners and losers on both sides of the Atlantic.  Accordingly, government relations efforts to favorably influence policy outcomes will be an integral component of every successful strategic business plan.  That requires a deep understanding of the nuts and bolts of the relevant issues and relationships with key policymakers in the U.S., UK, EU so they can receive the best input on the merits of competing regulatory alternatives.

ARTICLE BY Daniel F. C. Crowley,  Bart GordonBruce J. HeimanKarishma Shah PageGiovanni Campi & Ignasi Guardans of K & L Gates

Copyright 2016 K & L Gates

Social Media Policy Checklist For Employers

Social Media PolicyA social media policy or a set of guidelines helps your employees make smarter decisions when marketing your brand, products and services online and may mitigate the risk of coming under the radar of the FTC or another regulatory agency or simply avoiding bad PR.

Key Players.  Legal should play a key role in creating a social media policy or set of guidelines, but it is wise to involve personnel from marketing, IT, and HR.   Also consider including representatives from a selection of departments to get valuable input from employees that the policy is intended to guide.

Identify and Evaluate.  Before drafting a social media policy, the key players must carry out internal due diligence.

  • Identify and evaluate the categories of confidential information that your employees have access to and may inadvertently share on social media.
  • Identify and evaluate the type of content that employees post on social media platforms.  Is the content generally created in-house?  By an ad agency?  From other third-party sources?  Are social media campaigns usually text-only or do they include photos, music, videos, endorsements?  Understand the legal issues associated with posting content online.
  • Identify and evaluate other legal risks associated with the use of social media in your business, including third-party terms of use, employment laws, privacy claims, securities laws and other laws that may be triggered by the use of social media by employees. For example, the National Labor Relations Board has found overly restrictive social media policies to violate employees’ protected rights.

Purpose and Scope.  The policy should reflect the type of social media engagement that your company and employees actually use.  For example, does your company maintain a Facebook® page or a blog?  Use LinkedIn® to post articles?  Run promotions on Instagram®?  Do your employees use personal social media accounts to post on behalf of the company or only employer-created accounts?  The answers to these questions will affect the types of social media guidelines that you should create for your employees.

Be Practical, Positive and Consistent.  The policy should be easy to read and interpret.  The intent is not to discourage social media use, but to make use smarter.  Try to phrase the guidelines as things employees “can” do rather than cannot do.  Use terms that employees engaged in social media will understand.  For example: avoid using terms from the Copyright Act such as “reproduce, distribute or display,” and instead use “post, tweet or pin.”  The policy should also match the general values and culture of your company and the other policies that you may have in place that overlap with social media policies.

Training.  Training is essential.  Do not just add the policy to the employee handbook and hope that your employees will read it.  Explain why social media guidelines are important to the company and the company’s reputation and relationship with customers, vendors and other third parties.  Explain the legal risks of “social media posts gone wrong.”  Arrange a lunch and learn to walk through the policies and provide examples of “Dos and Don’ts.”  Create a short checklist of key takeaways from the policy and post the checklist in areas where employees who regularly post on social media work.

Monitor and Re-visit.  Monitor compliance and ensure enforcement is uniform.  Social media changes quickly, so the policy should also be re-visited frequently to make sure that new forms of social media engagement are captured.

Copyright © 2016 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.

Legal Challenge to EU-US Privacy Shield Framework

EU-US Privacy ShieldAs widely expected, the EU-US Privacy Shield is being challenged before the European courts.

What is Privacy Shield?

In October 2015, the Court of Justice of the European Union (CJEU) ruledthat the European Commission’s decision on adequacy for the Safe Harbor scheme was invalid.  The European Union and the United States agreed a new framework for the exchange of personal data for commercial purposes called the Privacy Shield to replace Safe Harbor. The Privacy Shield Framework was deemed adequate for the transfer of personal data by the European Commission in a decision dated 12 July 2016. Adequacy is granted only where the standard of protection in a third country is “essentially equivalent” to the rights and freedoms guaranteed by the EU regime on data protection.

Safe Harbor was challenged on the grounds that public authorities in the US had access to the content of electronic communications originating within the EU. When ruling on the European Commission’s adequacy decision in respect of Safe Harbor, the CJEU considered that the requirements for adequacy cannot be met where a regime compromises the right to respect for private life and fails to allow an individual to pursue legal remedies and to have access to their personal data.

The EU Article 29 Working Party recently published its opinion on the EU-U.S. Privacy Shield. It said that, despite improving some of the areas of the Safe Harbor scheme which had been particularly criticised, Privacy Shield still did not sufficiently address “massive and indiscriminate surveillance of individuals” by the US national security authorities in the light of the fight against terrorism.  The Working Party further added that this “can never be considered proportionate and strictly necessary in a democratic society as is required under the protection offered by the applicable fundamental rights”.

The Legal Challenge

The legal challenge was filed in Europe’s General Court (the Court of First Instance) on 16 September 2016 by a privacy advocacy group called Digital Rights Ireland but was only recently made public.  The General Court’s website reveals little more of substance about the challenge saying only that there is an “action for annulment” and the subject matter is “area of freedom, security and justice”. Reuters has reported that Digital Rights Ireland seeks annulment of the European Commission’s approval of the adequacy decision on the Privacy Shield Framework.

It remains to be seen how the case will be decided, but in reviewing Safe Harbor the CJEU established rationale on what adequacy means in light of the transfer of personal data. The Privacy Shield will remain in effect until the courts decide otherwise, which could take up to a year.

Matt Buckwell is co-author of this article. 

© Copyright 2016 Squire Patton Boggs (US) LLP

Calculation of California Paid Sick Leave May Spook Employers

As if paid sick leave wasn’t scary enough!  From accrual methods, to the protections provided to the time off, to the varying (and ever growing) laws in different jurisdictions, paid sick leave can be spooky.  What about how to calculate the rate of pay for the paid sick leave??  On October 11, 2016, the California Department of Industrial Relations, Division of Labor Standards Enforcement (“DLSE”) issued an opinion letter regarding its interpretation under California’s Healthy Workplace Health Families Act of 2014 (the “California Paid Sick Leave Law”) of the method of calculation of paid sick leave for employees paid by commissions and exempt employees who are given an annual, non-discretionary bonus.

California paid sick leave, State SealAs discussed in our July 13, 2015 article, the California legislature amended the California Paid Sick Leave Law to address, amongst other topics, the calculation of the rate of pay for sick leave.  In the Amendment, the legislature provided the following clarification regarding calculation of the rate of pay of sick time:

  • Non-exempt employees. The Amendment required an employer to calculate paid sick time for non-exempt employees using one of the following methods: (1) calculate the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek; OR (2) divide the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.

  • Exempt employees. The Amendment required that paid sick time for “exempt employees” be calculated in the same manner as the employer calculates wages for other forms of paid leave time. This provision of the Amendment did not limit the categories of exempt employees which this calculation method applied to.

Now the DLSE has issued an opinion letter further interpreting these provisions.

How Should Employers Calculate Paid Sick Leave for Employees Only Receiving Commissions?

According to the DLSE’s opinion letter, employers must calculate paid sick leave payments for employees “who are almost entirely paid by commissions” as if they are non-exempt employees under the Amendment.  This opinion letter takes the position that only those employees exempt under one of the white collar exemptions (professional, executive, or administrative exemptions) may be paid their sick leave as an “exempt employee” under the Amendment.  The DLSE’s opinion letter maintains that employees classified as exempt under the outside or inside sales exemptions are not deemed to be “exempt” for purposes of the Amendment’s calculation of the rate of pay for sick leave.

How Should Employers Calculate Paid Sick Leave for Exempt Employees Who Receive an Annual Bonus?

The DLSE’s opinion letter then addressed how an employer calculates paid sick leave for an exempt employee under the white collar exemptions and who also receives a non-discretionary annual bonus at the end of each year.  The DLSE reasoned that a non-discretionary bonus does not figure into the salary of an exempt employee, and that under the Amendment, the employee would be paid an amount of pay equal to his or her regular salary for the sick day.

Jackson Lewis P.C. © 2016

Cyber Security Awareness Needs To Last Beyond October

Cyber Security Awareness MonthThe U.S. Department of Homeland Security (DHS) has designed October as National Cyber Security Awareness Month. But as we leave October, remember that data security is an ongoing challenge that requires continued vigilance not just from information system hacking, but also from employee error and other threats. Setting up a comprehensive training and awareness program is critical – and this outline can help you continue keeping your organization aware of cyber security throughout the year.

DHS’ purpose is to engage and educate public and private sectors through events and initiatives that raise awareness about cybersecurity, make certain tools and resources available, and increase our resiliency in the event of a cyber incident. This is a great effort and DHS collects helpful information and a number of resources for visitors to its site. But by selecting October to draw attention to cyber security, surely DHS did not intend that October be the only month that we think about this important area.

Earlier this year, the FBI reported a significant increase in ransomware attacks. Late last year, the Wall Street Journal reported on a survey by the Association of Corporate Counsel (“ACC”) that found “employee error” is the most common reason for a data breach. Training and creating awareness to deal with these continued and growing risks is critical. In fact, for many organizations, doing so will help satisfy legal requirements for securing data. And, it is a mistake to believe that only organizations in certain industries like healthcare, financial services, retail, education and other regulated sectors have obligations to train employees about data security. A growing body of law coupled with the vast amounts of data most organizations maintain should prompt all organizations to assess their data privacy and security risks, and implement appropriate awareness and training programs.

Here are some questions to ask when setting up your own program, which are briefly discussed in the FBI report above:

  • Who should design and implement the program?

  • Who should be trained?

  • Who should conduct the training?

  • What should the training cover?

  • How often should training be provided to build awareness?

  • How should training be delivered?

  • Do we need to document the training?

No system is perfect, however, and even a good training and awareness program will not prevent data incidents from occurring. But in the absence of such a program, the question you will have to answer for your organizations likely will not be why didn’t the organization have a system in place to prevent all breaches. Instead, the question will be whether the organization had safeguards that were compliant and reasonable under the circumstances.

Jackson Lewis P.C. © 2016