The National Law Forum

USCIS Proposal May Increase Strike Zone for Professional Athletes

The U.S. Citizenship and Immigration Services (USCIS) has proposed new guidance for adjudicating O-1 visa petitions for athletes and other individuals of extraordinary ability in certain fields. If the proposal becomes effective, athletes will have greater flexibility in satisfying the O-1 visa criteria.

Under current USCIS regulations, an athlete may qualify for an O-1 visa by demonstrating extraordinary ability in his or her field in one of three ways: (A) by reason of a nomination or receipt of a significant national or international award; (B) by meeting a certain number of listed criteria; or (C) by submitting “comparable evidence” when the listed criteria in part (B) do not readily apply.

Part (A) is fairly straightforward. For example, winning a Gold Glove award would qualify the athlete. The same goes for league MVP or an Olympic gold medal. If an athlete does not meet Part (A), Part (B) requires meeting at least three of the USCIS criteria, such as receiving lesser but still nationally or internationally recognized prizes or awards, membership in associations requiring outstanding achievements, being written about in major media, making athletic contributions of major significance, being employed in a critical capacity for a prestigious organization, and commanding a high salary.

If an athlete does not meet Part (B), then Part (C), the catch-all “comparable evidence,” aka “alternate but equivalent,” should be considered. But here’s the rub: the regulatory text is not clear as to exactly when comparable evidence may be considered. Can applicants go directly to Part (C) or must they meet a certain number of the Part (B) criteria before comparable evidence could be considered? Moreover, must an athlete show that all or a majority of the Part (B) criteria do not readily apply?

The proposed guidance attempts to clarify this ambiguity, stating that comparable evidence can be considered on a criterion-by-criterion basis. That is, to an athlete need not first satisfy a minimum number of the Part (B) criterion before moving on to Part (C). An athlete must show only that any single criterion does not readily apply to his or her field before offering comparable evidence as to that criterion, as well as why the submitted evidence is “comparable” to the Part (B) criterion listed in the regulations. In addition, a petitioner relying upon comparable evidence still must establish the beneficiary’s eligibility by satisfying at least three separate evidentiary criteria, as required under the regulations.

According to the proposal, even if awards aren’t given for the league’s best on-base percentage or for singlehandedly increasing ticket sales, it’s certainly comparable evidence. It’s time to start thinking outside the batter’s box. This proposed guidance would make the path to an O-1 visa a little clearer.

Article By Gregg E. Clifton of Jackson Lewis P.C.

Foreign Correspondent Banking – The Good, The Bad and The Ugly

Foreign correspondent accounts have long been used by financial institutions to facilitate cross-border transactions. However, as a result of its susceptibility to money laundering and terrorist financing, this practice is encountering heightened concern among U.S. banking regulators. In this rigorous environment, it is increasingly important for financial institutions to take positive actions designed both to safeguard their operations against illicit transactions and, in the event their correspondent business comes under regulatory scrutiny, to establish a defensible position.

What is a foreign correspondent account?

A “correspondent account” is statutorily defined as “an account established to receive deposits from, make payments on behalf of a foreign financial institution, or handle other financial transactions related to such institution.”¹ Laying the foundation for its Anti-Money Laundering (AML) guidance on foreign correspondent accounts, the Federal Financial Institutions Examination Council (FFIEC) adds some detail explaining, “An ‘account’ means any formal banking or business relationship established to provide regular services, dealings, and other financial transactions. It includes a demand deposit, savings deposit, or other transaction or asset account and a credit account or other extension of credit.”² Moving from that neutral view, the FFIEC later takes a more positive tone, stating, “Foreign financial institutions maintain accounts at U.S. banks to gain access to the U.S. financial system and to take advantage of services and products that may not be available in the foreign financial institution’s jurisdiction. These services may be performed more economically or efficiently by the U.S. bank or may be necessary for other reasons, such as the facilitation of international trade.”³

The Good: Benefits of foreign correspondent banking

The concept of foreign correspondent banking is an accepted practice that can be very beneficial to financial institutions and their customers. Correspondent banks essentially act as a domestic bank’s agent abroad in order to service transactions originating in foreign countries. Championing a positive view, the Bank for International Settlements observes, “Through correspondent banking relationships, banks can access financial services in different jurisdictions and provide cross-border payment services to their customers, supporting international trade and financial inclusion”.⁴

The Bad: Challenges of foreign correspondent banking

Notwithstanding the benefits related to foreign correspondent banking, this practice also presents significant challenges, with regulatory burden featured prominently. Extensive rules governing foreign correspondent accounts implement the provisions found in USA PATRIOT Act sections 312 (imposing due diligence and enhanced due diligence requirements on U.S. financial institutions maintaining foreign correspondent accounts), 313 (preventing foreign shell banks from having access to the U.S. financial system) and 319(b) (authorizing federal law enforcement to investigate any foreign bank maintaining a U.S. correspondent account). The decline in correspondent banking relationships has much to do with the challenge of regulatory compliance, as recently noted by the American Bankers Association, “[O]ne key factor leading to the decline in correspondent/respondent banking relationships is the heightened regulatory burden on banks related to anti-money laundering and counter terrorism compliance.”⁵

The Ugly: Foreign correspondent banking as a means to launder money and finance terrorism

The regulatory strictures are not without good reason. There have been instances of foreign correspondent accounts being used to launder money and to potentially finance terrorism. Even in the early rush to implement the USA PATRIOT Act, the OCC, though taking a balanced view, expressed its concern, stating, “Although [correspondent] accounts were developed and are used primarily for legitimate purposes, international correspondent bank accounts may pose increased risk of illicit activities.”⁶ In recent years, the U.S. government has sent a strong message to financial institutions that fail to create a process to prevent criminal behavior. Financial institutions that disregard their obligations under the Bank Secrecy Act or operate without effective anti-money laundering programs have been the subject of enforcement actions resulting in hefty penalties. In 2012, a Virginia-based bank that allowed itself to be used to launder drug money flowing out of Mexico agreed to pay a record $1.92 billion to U.S. authorities, including hundreds of millions of dollars in civil money penalties to the Office of the Comptroller of the Currency, the Federal Reserve, and the Treasury Department.⁷ In 2015, a German-based bank and its U.S. branch accused of violating laws barring transactions with Iran, Sudan, Cuba and Myanmar, as well as abetting a multi-billion dollar securities fraud, agreed to pay $1.45 billion in fines.⁸ In both of these high-profile cases, government authorities cited Bank Secrecy Act violations including: (1) failure to have an effective AML program, (2) failure to conduct adequate due diligence or to obtain “know your customer” information with respect to foreign correspondent bank accounts, and (3) failure to detect and adequately report evidence of money laundering and other illicit activity. Mirroring the U.S. actions, the international Financial Action Task Force has sounded this stern warning in addressing the cross-border financial activities of Iran and North Korea: “Jurisdictions should also protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices … .”⁹

The Solution: How financial institutions can best protect themselves from a harmful correspondent banking relationship

In order to meet its obligations to measure, monitor and control risks, a financial institution should consider the following actions:

1. Ensure BSA/AML policies and procedures are reviewed at least annually and adjusted to address any new risks related to correspondent banking activities.

2. Perform an annual risk assessment to determine the adequacy of its BSA/AML/OFAC program, especially as it relates to correspondent banking.

3. Conduct due diligence on counterparties to understand the nature and extent of the various aspects of the correspondent’s business, including, but not limited to, ownership, products, services, customers, locations, etc. Due diligence should be ongoing based upon the nature and scope of the correspondent activities and should include periodic validation of the counterparties and their activities by the correspondent bank.

4. Ensure that adequate expertise and resources are available to establish a BSA/AML/OFAC program capable of effectively and timely monitoring the volume and nature of activities processed through the correspondent account.

5. Ensure that the correspondent bank, and not the initiating bank, administers the systems used to process correspondent banking transactions, thus allowing the correspondent bank to independently identify exceptions, generate reports and analyze data to support its BSA/AML/OFAC program.

6. Perform monitoring of processed correspondent banking transactions in a timely manner, preferably through the use of an automated system that can effectively aggregate transactions and create “alerts” in order to identify potentially suspicious transactions.

7. Ensure that the correspondent bank establishes an enhanced due diligence (EDD) protocol that will be followed for investigative purposes when transactions trigger a BSA/AML alert in the monitoring system.

Steven Szaroleta and Walter Donaldson are co-authors of this article.

Article By Frank A Mayer, III, Richard M. Berman, Jonathan L. Levin & Molly K. Lampe of Dinsmore & Shohl LLP

Steven Szaroleta and Walter Donaldson are co-authors of this article.

_{¹ 31 U.S. Code § 5318A(e)(1)(B)

² https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_027.htm

³ http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_047.htm

⁴ http://www.bis.org/cpmi/publ/d136.pdf

⁵ http://www.aba.com/Advocacy/commentletters/Documents/cl-BIS-CorrespondentBanking2015Dec.pdf

⁶ http://www.occ.gov/topics/bank-operations/financial-crime/money-laundering/money-laundering-2002.pdf

⁷ http://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M20121211

⁸ http://www.justice.gov/opa/pr/commerzbank-ag-admits-sanctions-and-bank-secrecy-violations-agrees-forfeit-563-million-and

⁹ http://www.fatf-gafi.org/documents/documents/public-statement-october-2015.html#DPRK}

Dave & Busted? Reductions in Employee Work Schedules May Not Negate Employer’s ACA Health Coverage Mandate

Under the Affordable Care Act (ACA), employers with at least 50 full-time employees (“FTEs) must generally offer qualifying health insurance to all employees who work at least 30 hours or more per week. A company that fails to satisfy this so-called “employer mandate” faces the possibility of significant penalties under the ACA. As a result, the ACA amplifies many risks for companies with respect to their employment classifications and the delivery of health care benefits to their employees.

ACA Implications for Employers

In response to these uncertainties, some employers have gone so far as to reduce the hourly work schedules of some employees to less than 30 hours per week to avoid any additional costs under the ACA employer mandate. In what is believed to be a case of first impression, the plaintiffs in Marin v. Dave & Buster’s, Inc., S.D.N.Y., No. 1:15-cv-036081 challenged their employer over the reductions to their work schedules by filing a class action suit in federal court in May 2015. Specifically, current and former employees alleged that Dave & Buster’s, the national restaurant chain, violated the protections under Section 510 of the Employee Retirement Income Security Act (“ERISA”) by intentionally interfering with their eligibility for benefits under the company’s health plan. They also claimed damages for lost wages and demanded the restoration of their health coverage, as well as reimbursement of their out-of-pocket medical costs.

In response to the lawsuit, Dave & Buster’s filed a motion to dismiss and argued that the plaintiffs’ ERISA Section 510 claim failed as a matter of law because there was no guaranteed “accrued benefit” over future health insurance coverage for hours not yet worked. On February 9, 2016, the United States District Court for the Southern District of New York denied the company’s motion to dismiss. The court found that the complaint “sufficiently and plausibly” alleged enough facts to support a possible finding that Dave & Buster’s intentionally interfered with the plaintiffs’ rights to receive benefits under the company’s health plan. The court noted that the complaint referenced specific e-mails and other communications that the plaintiffs allegedly received when their work schedules were reduced, as well as public statements by senior executives and disclosures in the company’s securities filings, which overtly explained that the workforce management protocols were instituted to thwart the potential impact of the ACA on the company’s bottom line.

While the decision on the motion to dismiss does not necessarily mean that the employer will ultimately lose, it does signal the court’s willingness to allow the plaintiffs to develop their legal theories in subsequent court filings. One can also question the impact to the court, at least initially, of the company’s open and obvious disclosures about its reasoning for reducing the employees’ work schedules. Based on the strong wording of the court’s ruling, however, these obvious and seemingly bold statements certainly did not help the company’s request for an early exit from this case. As a result, the court may eventually allow robust discovery which could, of course, be cumbersome and expensive for the company.

Takeaways for Employers

In light of this case development, companies that are subject to the ACA employer mandate should review their compliance strategies now to address any risks with their employment classifications and the delivery of future health care benefits to their FTEs, and also take heed in the manner as to how they communicate any reductions in employees’ work schedules.

Article By W. Andrew Douglass & Brian M. Johnston of Polsinelli PC

Dave & Busted? Reductions in Employee Work Schedules May Not Negate Employer’s ACA Health Coverage Mandate

ACA Implications for Employers

Takeaways for Employers

Article By W. Andrew Douglass & Brian M. Johnston of Polsinelli PC

The ‘Commoditization’ of Water in The West

The treatment of water as a commodity, rather than a utility service, is gaining momentum in the western U.S. A recent Pro Publica/The Atlantic (February 9, 2016) article addresses the acquisition of water by hedge fund investors as commodity investments, instead of water service.

A New York City hedge fund manager, Disque Dean Jr., has identified numerous financially distressed agricultural properties with valuable water rights. Mr. Dean has acquired a number of these properties through his Water Asset Management fund, with an eye toward bringing a market based approach to water allocation.

Historically, access to water in the West has been allocated on the principle of “prior appropriation”-a concept of “first in time, first in right” to the water. While numerous limitations on the use (“beneficial use” is required to retain water rights) and its transfer, Mr. Dean asserts that allowing the purchase and sale of water on a market basis is one solution to the issue of the growing scarcity of water west of the Mississippi.

The experience of Crowley County, Colorado however, is offered as a cautionary tale on the treatment of water as a commodity. One of Colorado’s most fertile agricultural areas has dried up in the face of the sale of water to metropolitan water districts located far from the area where the water rights were originally held. Farmers and ranchers in the area seized the opportunity to cash out on their valuable water holdings, leaving much of the county’s former farm land high and dry. While other western states have dealt with the water as commodity issue more successfully (California’s Palo Verde Valley is offered as a success story) the creation of “water markets” and their ultimate impact in the West, is still up for grabs.

Article By Mark A. Davidson of Lewis Roca Rothgerber LLP

USCBP Expected to Extend Global Entry Eligibility to All German Citizens

I USCBP Expected to Extend Global Entry Eligibility to All German Citizens n a notice expected to be published in the Federal Register on Tuesday, February 16th, with an effective date the same day, US Customs and Border Protections (USCBP) announced that it is extending Global Entry eligibility to all citizens of Germany.

In 2013, USCBP launched a pilot program for German citizens to enroll in Global Entry. Eligibility for Global Entry for German citizens was limited to certain citizens who participated in ABG Plus, Germany’s former trusted traveler program. Individuals who qualified and received Global Entry authorization under the pilot program will not have to reapply.

Application Process

Newly eligible citizens of Germany will first need to visit an EasyPASS enrollment center in Germany and complete the risk assessment by the German Federal Police. Once approved, the German Federal Police will notify USCBP and the applicant will be able to apply for Global Entry via the GOES website.

Germany Registered Traveler Reciprocity

US Citizens may apply for EasyPASS at an EasyPASS enrollment center in Germany. There is currently no fee to apply for this program. You do not need to be registered in Global Entry in order to qualify for EasyPASS.

See more at: http://www.natlawreview.com/article/uscbp-expected-to-extend-global-entry-eligibility-to-all-german-citizens#sthash.8hVrniyu.dpuf

Private Email Woes Infect The Private Sector in Delaware

email Vice Chancellor J. Travis Laster’s ruling in Amalgamated Bank v. Yahoo!, Inc., C.A. No. 10774-VCL (Del. Ch. Feb. 2, 2016) should sound a tocsin to directors that their “private” emails may not be so private. The ruling addressed Amalgamated Bank’s demand to inspect the books and records of Yahoo! pursuant to Section 220 of the Delaware General Corporation Law. The bank sought to inspect, among other things, documents that reflect discussions or decisions of Yahoo’s full Board or Committee. Documents covered by the demand included emails to and from the directors, from management or the compensation consultant, emails among the directors themselves, and documents and communications prepared by Yahoo officers and employees about the Board‘s deliberations.

Vice Chancellor Laster found that emails were records subject to inspection under Section 220 and that through Delaware’s jurisdiction over a corporation, a court can compel production of documents in the possession of officers, directors, and managing agents of the firm. According to the Vice Chancellor, the court can impose sanctions or other consequences on the firm if the officer, director, or managing agent fails to comply. He further noted that if a personal email account was used to conduct corporate business, the email is subject to production under Section 220. Directors and corporate officers should therefore take heed that emails concerning corporate business may be subject to disclosure even if conducted using a private email address.

Article By Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP

Department of State Issues March 2016 Visa Bulletin – China EB-3 Now Even with EB-5, Expectations Set For Coming Months

The July 2015 Visa Bulletin Brings Little Change The March 2016 Visa Bulletin is now available online. The significant news arises in the EB-3 category with respect to dates for filing visa applications: EB-3 Worldwide is now current. EB-3 China has advanced from Oct. 1, 2013, to May 1, 2015, making the native Chinese EB-3 and EB-5 filing dates identical. Compared to February, March 2016 brings modest-to-moderate movement forward in the “final action dates” for the employment-based cases.

Below are the two charts for March 2016:

APPLICATION FINAL ACTION DATES FOR EMPLOYMENT-BASED PREFERENCE CASES

Department of State Issues March 2016 Visa Bulletin – China EB-3 Now Even with EB-5, Expectations Set For Coming Months

DATES FOR FILING OF EMPLOYMENT-BASED VISA APPLICATIONS

Department of State Issues March 2016 Visa Bulletin – China EB-3 Now Even with EB-5, Expectations Set For Coming Months

The Visa Bulletin also put forth the following projection of EB visa availability in the coming months, setting the expectations for stakeholders:

EB-1 : Projected to stay current
EB-2:
- Worldwide: Projected to stay current
- China: Movement up to five months
- India: Movement up to three months
EB-3:
- Worldwide: Recent forward moment will generate demand – once materialized it will be necessary to establish a cut-off date
- China: Movement up to five months
- India: Movement up to one month
- Mexico: Will remain at worldwide date
- Philippines: Movement up to four months
EB-4: Current “for most countries”
EB-5:
- All countries (except China): Will remain current.
- China: “Slow forward movement”

Article By Matthew T. Galati of Greenberg Traurig, LLP

Medical Marijuana Need Not Be Accommodated by New Mexico Employers

New Mexico employers are not required to accommodate an employee’s use of medical marijuana, according to the federal district court in New Mexico. In dismissing an employee’s discrimination lawsuit, the Court recently ruled that an employee terminated for testing positive for marijuana did not have a cause of action against his employer for failure to accommodate his use of medical marijuana to treat his HIV/AIDS. Garcia v. Tractor Supply Co., No. 15-735, (D.N.M. Jan. 7, 2016).

New Employee Terminated For Positive Drug Test

When Rojerio Garcia interviewed for a management position at a New Mexico Tractor Supply store, he was up front about having HIV/AIDS. He also explained that he used medical marijuana under the state’s Medical Cannabis Program as a treatment for his condition upon recommendation of his doctor.

Tractor Supply hired Garcia and sent him for a drug test; Garcia tested positive for cannabis metabolites. He was terminated from employment. Garcia filed a complaint with the New Mexico Human Rights Division alleging unlawful discrimination based on Tractor Supply’s failure to accommodate his legal use of marijuana to treat his serious medical condition under New Mexico law.

No Affirmative Accommodation Requirements in New Mexico’s Medical Marijuana Law

Garcia argued that New Mexico’s Compassionate Use Act (CUA), which permits the use of marijuana for medical purposes with a state-issued Patient Identification Card, should be considered in combination with the state Human Rights Act, which, among other things, prohibits employers from discriminating on the basis of a serious medical condition. He argued that the CUA makes medical marijuana an accommodation promoted by the public policy of New Mexico. Accordingly, Garcia asserted that employers must accommodate an employee’s use of medical marijuana under the New Mexico Human Rights Act.

The Court disagreed. It stated that, unlike a few other states whose medical marijuana laws impose an affirmative obligation on employers to accommodate medical marijuana use, New Mexico’s law did not. Consequently, Garcia did not have a claim under the CUA.

The Court then rejected Garcia’s arguments that his termination violated the Human Rights Act. The Court found that Garcia was not terminated because of, or on the basis of, his serious medical condition. He was terminated for failing a drug test. The Court stated that his use of marijuana was “not a manifestation” of his HIV/AIDS, so Tractor Supply did not unlawfully discriminate against Garcia when it terminated him for his positive drug test.

Court Rejected Public Policy Arguments

Garcia argued that the public policy behind the state’s legalization of medical marijuana meant that employers should be required to accommodate an employee’s legal use of marijuana. The Court rejected the argument, noting that marijuana use remains illegal for any purpose under federal law. It stated that if it accepted Garcia’s public policy position, Tractor Supply, which has stores in 49 states, would have to tailor its drug-free workplace policy for each state that permits marijuana use in some form.

The Court also relied on the fact that the CUA only provides limited state-law immunity from prosecution for individuals who comply with state medical marijuana law. However, Garcia was not seeking state-law immunity for his marijuana use. Instead, he sought to affirmatively require Tractor Supply to accommodate his marijuana use. The Court stated that to affirmatively require Tractor Supply to accommodate Garcia’s drug use would require the company to permit conduct prohibited under federal law. Therefore, the Court ruled that New Mexico employers are not required to accommodate an employee’s use of medical marijuana.

What This Means For Employers

The Tractor Supply decision is consistent with rulings from courts in other states that have similarly ruled that an employer may lawfully terminate an employee who tests positive for marijuana. Although Garcia may appeal this decision, it is difficult to imagine that an appellate court will overturn it as long as marijuana use remains illegal under federal law, and state law does not require a workplace accommodation.

In light of this decision, take time now to review your drug-free workplace and drug testing policies. Make certain that your policies apply to all controlled substances, whether illegal under state or federal law. Clearly state that a positive drug test may result in termination of employment, regardless of whether the employee uses medical marijuana during working hours or appears to be “under the influence” at work. Communicate your drug-free workplace and testing policies to employees and train your supervisors and managers on enforcing the policies in a consistent and uniform manner.

Article By Little V. West of Holland & Hart LLP

Supreme Court Stays Clean Power Plan

On February 9, 2016, the U.S. Supreme Court issued a 5-4 decision staying implementation of the Clean Power Plan until the D.C. Circuit rules on challenges to the Plan. The Court left open the possibility that it would review the D.C. Circuit’s ultimate decision.

The decision delays President Obama’s Climate Action Plan. The Clean Power Plan is its key climate change rule. It requires states and utilities to reduce carbon dioxide (CO₂) emissions by generating less electricity from coal, and more from lower carbon-emitting sources like natural gas, or zero-carbon sources like solar and wind. The Plan has an ambitious goal: to reduce CO₂ emissions 32% below 2005 levels by 2030.

Some relevant background: On January 21, 2016, the D.C. Circuit refused to stay the Clean Power Plan while litigation is pending before it. Opponents of the rule, including 29 states and state agencies and several industry and trade groups, appealed that decision to the Supreme Court.

The stay will be in place at least until the D.C. Circuit rules on the pending challenges, likely late this year. Briefing deadlines are in April, and oral argument is scheduled in early June. The Supreme Court’s stay order will also remain in effect if the Court decides to review the D.C. Circuit’s decision, which it is expected to do, regardless of the outcome.

What are the implications of the stay? In the short term, the September 6, 2016 deadline for states to either submit their state plans or request a two-year extension will be postponed.

The Supreme Court’s action was unusual. The 5-4 vote suggests that the Court was persuaded that the significant challenges to the rule and the economic consequences of implementing it outweighed EPA’s interests in addressing climate change this year.

Article By Jane E. Montgomery & Amy Antoniolli of Schiff Hardin LLP

The National Law Forum

USCIS Proposal May Increase Strike Zone for Professional Athletes

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