SEC Issues Final “Conflict Minerals” Rule
The SEC has issued its final rule to implement the “conflict minerals” disclosure requirements in Dodd-Frank. The SEC originally issued proposed rules with a comment period that was to have ended in January 2011. Final rules were required to be published by April of 2011. The SEC formally extended the public comment period by 30 days and then spent nearly 17 months receiving thousands of letters, meeting with many “interested persons,” and hosting an SEC Roundtable. Dodd Frank amended the SEC Exchange Act of 1934 by adding a requirement that the SEC publish disclosure rules concerning the use of certain minerals that originate in the Democratic Republic of the Congo. To learn more about the disclosures required by the rule, please click here to read the Bulletin published by the Corporate Finance and Securities Client Service Group on August 29, 2012.
The Contraceptive Mandate: What Do Religious Employers Do Now?
In a landmark 5-4 decision announced in June, the United States Supreme Court upheld the key provisions of the Patient Protection and Affordable Care Act (ACA). Perhaps most noteworthy for religious employers are the provisions requiring group health plans to provide preventive health services without charging a co-pay. In August, the Department of Health and Human Resources (HHS) adopted guidelines outlining the required preventive health care for women. That guidance requires coverage for all FDA-approved contraceptive services, including the “morning after” pill and the “week after” pill. Coverage of these services at no cost is required for plan years beginning on or after August 1, 2012. To learn more about the decision and exemptions for certain employers, please click here to read the Alert published by the Religious Organization Team on August 7, 2012.
Two Key Rulings of the Supreme Court
A “Common Sense” Approach to Overtime Exemptions. The Supreme Court’s recent ruling in Christopher v. SmithKline Beecham Corp., DBA GlaxoSmithKline established that when classifying employees as exempt or nonexempt under the Fair Labor Standards Act, employers should not abandon common sense and industry practice. The Christopher case puts the Department of Labor and potential plaintiffs on notice that unreasoned and overly narrow interpretations of the exemptions should be rejected by courts, especially when such interpretations would subject business to unfair surprise.
Supreme Court Strikes Down Much of Arizona Immigration Law. Arizona enacted the Support our Law Enforcement and Safe Neighborhoods Act in 2010 in an attempt to address immigration concerns within its borders. In a 5-3 decision, the Supreme Court struck down a significant part of the Arizona law.
For summaries of these two important rulings of the Supreme Court, please click here for the Labor and Employment Client Service Group’s Alert published July 16, 201.
New York Appeals Court Decision Highlights Defenses for Financial Institution Defendants Against Structured Product Claims.
A recent decision from the New York Court of Appeals highlights some of the winning arguments financial-institution defendants can make in state-court litigation brought by investors in structured financial products. In Oddo Asset Management v. Barclays Bank PLC, the Court of Appeals affirmed the dismission of claims for aiding and abetting breach of fiduciary duty and tortious interference with contract. Although the Court did not define any new legal principles, its decision illustrates the ways existing law can be applied to defeat claims against defendants alleged to have played an important role in the distribution of failed investments. To learn more about the decision in this case, please click here to read the Securities Litigation and Enforcement Client Service Group’s Alert published July 9, 2012.
Employee Testimonials Can be Risky Business
Online retailers often permit (and encourage) consumers to review their products. Reviews — whether done on the retailer’s website or on a third-party website — serve a dual purpose of engaging consumers to interact with the retailer and providing a ready source of testimonials that can be used in future marketing. Over the past several years the FTC has warned that consumers can be deceived when a testimonial is written by a person that has a material connection with the retailer. The FTC has launched at least a half-dozen investigations involving deceptive testimonials, and, in early July, the FTC announced its largest testimonial related settlement to date — $800,000. To read more about how retailers can avoid liability, please click here to read the Alert published by the Retailer & Consumer Products Group on July 10, 2012.
9th Circuit Holds TILA Bars Rescission Suits Filed More Than 3 Years After Consummation
In McOmie-Gray v. Bank of America (9th Cir. Feb. 8, 2012), the Ninth Circuit Court of Appeals held that under the Truth in Lending Act (“TILA”), “rescission suits must be brought within three years from consummation of the loan, regardless whether notice of rescission is delivered within that three-year period.” It ruled that the three year period in the Act is an absolute limitation on rescission actions and that the one year period for bringing claims applies only to damages actions and does not extend the time to file a claim for rescission even where the borrower has sent the Bank a written notice of rescission within three years of loan signing or “consummation.” To learn more about the facts in this case and the Court’s decision, please click here to read the Alert published by the Commercial Litigation Client Service Group and the Financial Institutions Client Service Group on March 6, 2012.
How Long Should You Retain Data? Recent Developments May Add Confusion Not Clarity
Businesses have always collected information about their customers, but with the explosion of on-line commerce the quantity of information collected has ballooned. One question that necessarily arises for almost any business is deciding how long it will keep the data it collects. Businesses are aware that future developments in technology will improve the usefulness (and value) of the data that is currently in their possession. Retaining consumer data, however, raises a number of legal risks which are often difficult to quantify in light of the changing regulatory and litigation landscape. For a discussion of how recent developments add to the legal complexity, please click here to read the Bulletin published by the Data Privacy & Security Team on March 16, 2012.
Supreme Court Weakens EPA’s Enforcement Regine
The United States Supreme Court handed landowners a major victory against the United States Environmental Protection Agency (EPA) in its unanimous decision in Sackett v. EPA, No. 10-1062. The decision announced March 21, 2012, held that Clean Water Act compliance orders can be challenged in court under the Administrative Procedures, undercutting EPA’s historic practice of using compliance orders to, in the words of the Court, “strong-arm” parties into voluntary compliance. To learn about the case and the Court’s decision, please click here to read the Alert published by the Environmental Client Service Group on March 22, 2012.
Social Media and the National Labor Relations Act: A Trap for Unwary Employers
The use of social media has become one of the most rapidly-changing areas in employment law today. What most employers do not realize is that the National Labor Relations Board has become very active in policing both the substance of social media policies and the actions of employers in addressing social media concerns. Please click here to read an overview of NLRB activity in the area of employee use of social media published by the Labor & Employment and Internet & New Media Client Service Groups on September 23, 2011.
Check It Out and Check It Off: 2012 Group Health Plan Checklist
While the Patient Protection and Affordable Care Act, as amended (“PPACA”), required significant design changes for group health plans in 2010 or 2011, some additional requirements must be implemented for 2012. Please click here to read the Alert published by the Employee Benefits & Executive Compensation Client Service Group on September 7, 2011.
IRS Establishes a Voluntary Classification Settlement Program
The IRS recently announced a new settlement program for employers with misclassified workers. Under the new program, employers can get a significant reduction in their federal employment tax liability associated with past nonemployment treatment by agreeing to properly classify their workers for future tax period. The announcement came on the heels of recent announcements that the IRS, Department of Labor and various state agencies are collaborating on examining worker misclassification issues. To learn more about the new program, please click here to read the Alert published by the Employee Benefits & Executive Compensation Client Service Group on September 30, 2011.
Department of Labor Issues Final Rule Requiring Follow-On Contractors to Hire Their Predecessor’s Employees
The Department of Labor issued a final rule just before Labor Day that, in effect, will given certain employees now performing under Federal government service contracts employment for life or at least for as long as the government continues to contract for those services. Although the rule does not take effect until the Federal Acquisition Regulation Council issues its complementary regulations, matters are sufficiently final that contractors should begin planning for how they are going to comply. To learn more about this new regulation, click here to read the Alert published by the Government Contracts Team on September 8, 2011.
U.S. House Panel Hears Divergent Opinions on SRO Oversight of Investment Advisers
Fund managers and other investment advisers should be aware that Congress is now considering legislation that would significantly alter regulation of the nation’s registered investment advisers. A key House subcommittee has heard widely divergent views on the proposed legislation entitled the “Investment Adviser Oversight Act of 2011.” To learn more about the draft legislation, click here to read the Alert published by the White Collar Defense and Investigations Securities Litigation and Enforcement Client Service Groups on September 20, 2011.
New Patent Reform Bill Poised to Significantly Change U.S. Patent Law
On September 8, 2011, Congress approved the Leahy-Smith America Invents Act of 2011. The Act materially alters a long history of patent law in the United States. Among the provisions addressed by the Act are who is entitled to a patent (“first to file” versus ”first to invent”) and who may file a “false marking” lawsuit. To read more about how the Act alters patent law, please click here to read the Bulletin published by the Intellectual Property Client Service Group on September 12, 2011.
FinCEN Issues Final Rule on Prepaid Access; Extends Compliance Date for Many Aspects of the Final Rule
New anti-money laundering regulations that directly impact retail business that issue or sell gift cards or other prepaid cards were issued by the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), The regulations require the collection and verification of customer information when certain prepaid cards are sold or reloaded. To read an overview of the Final Rule, please click here for the Alert published by the Financial Institutions Client Service Group on September 6, 2011. The Final Rule was set to go into effect on September 27, but FinCEN announced that it has extended the compliance date for most aspects of the regulations. For information on how the compliance dates changed, please click here to read the Alert published on September 12, 2011.
New Dual/Third Country National Rule Continues to Present Challenges
A new rule took effect in August which amended the International Traffic in Arms Regulations (ITAR) to include a new license exemption for the transfer of defense articles to dual/third country national employees of approved non-U.S. licensees under ITAR agreements. To read about the new rule, please click here for International Regulatory Bulletin published September 28, 2011.
DDTC Updates its “Guidelines for Preparing Electronic Agreements” to Implement New Dual/Third Country National Rule
In August, DDTC updated its “Guidelines for Preparing Electronic Agreements” (the “Guidelines”) to reflect implementation of the new rule and provide guidance to exporters preparing ITAR agreements. To learn more, please click here to read the International Regulatory Bulletin published September 28, 2011.
Electronic Payment of Registration Fees
The Directorate of Defense Trade Controls (DDTC) issued an amendment to the International Traffic in Arms Regulations (ITAR) that requires a change in the method of payment for registration fees. Effective September 26, 2011, all registration fees must be paid electronically via Automated Clearing House. To read about the amendment, please click here for the International Regulatory Bulletin published September 15, 2011.
French Working Time for Executives: Lump-Sum Remuneration Agreements Based on a Fixed Number of Working Days Per Year (so-called Forfaits-Jours)
The legal duration of work for employees in France is 35 hours per week, meaning that any hours required to be worked above this limit would normally be considered overtime. Executives are, however, most often not subject to this limit. For an outline of how the French Labor Code distinguishes between three types of executives, please click here to read the September 2011 Briefing published by the Paris Labor & Employment Client Service Group.
The Agency Workers Regulations 2010
UK’s new Agency Workers Regulations come into force on 1 October 2011. The regulations are intended to give agency workers the same basic employment rights and conditions as permanent staff employed directly by the relevant company. To learn about the new regulations, please click here for the September 2011 Briefing published by the London Labour and Employment Client Service Group.
China Announces Legal Changes That May Broaden Power to Investigate Bribery
In August the National People’s Congress of the People’s Republic of China released the draft Criminal Procedure Law Amendment to the public for comment. If passed, the amendment is expected to provide additional protection to the civil rights of accused parties. However, critics say that the amendment would also provide authorities legal cover to utilize secret locations to detain subjects suspected of engaging in acts involving national security, terrorism, or other serious crimes which may include serious bribery. To read about the amendment, please click here for the International Regulatory Bulletin published September 27, 2011.
U.S. Supreme Court Upholds Arizona’s Employment Verification Law
On May 26, 2011, the U.S. Supreme Court upheld the Arizona law that sanctions employers for hiring unauthorized aliens and endorsed Arizona’s requirement that employers use the federal E-Verify screening program. A 5-3 majority of the Court found that language in the Immigration Reform and Control Act of 1986 did not pre-empt the Arizona Law. For the answers to frequently asked questions about the Arizona law, please click here to read the Client Alert published by the Labor & Employment Client Service Group on August 4, 2011.
Employers Should Consider Expressly Prohibiting FMLA Fraud
Many employers have updated their FMLA policies to reflect recent amendments to the law and revisions to the regulations. Another aspect of an FMLA policy that merits attention is ensuring that the policy expressly prohibits FMLA fraud and specifies the penalty for the offense. The United States Court of Appeals for the Ninth Circuit issued an unpublished opinion earlier this year that reinforces the need for express fraud prohibition. To learn more about the implications of the opinion, please click here to read the Client Alert published by the Labor & Employment Client Service Group on August 19, 2011.
SEC Proxy Access Rule Vacated by Federal Court
The U.S. Court of Appeals for the District of Columbia Circuit recently set aside and vacated Exchange Act Rule 14a-11 concerning shareholder proxy access, adopted by the SEC on August 25, 2010. On a petition for review, a panel held that the SEC had “failed adequately to consider the rule’s effect upon efficiency, competition and capital formation,” as the SEC was required to do under its enabling statutes. Thus, the Court held that adoption of the Rule was “arbitrary and capricious” and vacated the Rule. To read more about the decision, please click here to read the Alert published by the Corporate Finance and Securities Client Service Group published August 4, 2011.
The Implications for FCPA Enforcement of the SEC’s New Whistleblower Rules
The SEC’s recent adoption of rules to implement the whistleblower program mandated by the Dodd-Frank Act has particular significance for enforcement of the Foreign Corrupt Practices Act. For a discussion of the overall SEC enforcement context for the new whistleblower rules, a summary of the rules, and a discussion of the key issues for FCPA enforcement, including recommendations that companies should take now, please click here to read the Alert published by the Global Anti-Corruption Team of the Securities Litigation and Enforcement and International Trade Groups on June 22, 2011.
Supreme Court De-Certifies Largest Employment Discrimination Class Action In History
In Wal-Mart Stores, Inc. v. Dukes, the Supreme Court reversed a lower court’s decision to certify a nationwide class pursuing employment discrimination claims against the nation’s largest employer. A 5-4 majority of the Court concluded that the class of 1.5 million current and former female employees could not satisfy the commonality requirement. For a discussion of the decision, please click here to read the Alert published by the Class and Derivative Actions section of the Labor & Employment Client Service Group on June 21, 2011.
Supreme Court Draws Bright Line Barring Securities Fraud Claims Against Advisers to Companies Who Do Not “Make” Statements At Issue
In June the U.S. Supreme Court issued a significant decision restricting the ability of plaintiffs to bring securities fraud actions against adviser defendants who play a role in preparing statements actually made by companies they are advising. In Janus Group, et al. v. First Derivative Traders, the court held that an investment adviser to a mutual fund could not be sued in a private securities fraud action for false statements made in mutual fund prospectuses. To read more, please click here for the Alert published by the Securities Litigation and Enforcement practice group on June 16, 2011.
W-2 Reporting of Employer-Provided Health Care Costs
The 2010 health care reform legislation included an obligation for employers to inform employees of the cost of their health coverage. The IRS has now issued Notice 2011-28, which provides interim guidance for employers on W-2 reporting of the cost of coverage. For more information, please click here to read the Alert regarding the Notice published by the Employee Benefits & Executive Compensation Client Service Group on April 5, 2011.
Form I-9: Changes to Accepted Documentation
As of May 16, 2011, the documents employees present to employers for I-9 verification are subject to new regulations. The U.S. Citizenship and Immigration Services of the Department of Homeland Security has issued a final rule concerning the list of acceptable documentation. To learn more about the changes in acceptable documentation, please click here to read the Alert published by the Labor & Employment Client Service Group on April 27, 2011.
Reminder for Plan Administrators to Review Confidentiality Procedures for Qualified Retirement Plans
Plan administrators of plans that offer employer stock as an investment alternative should review the disclosures provided to plan participants. Investment in employer stock represents a significant litigation threat for plan fiduciaries. However, the plan fiduciary may be relieved of liability for participant losses resulting from the decision to invest in employer stock if certain disclosures are provided under ERISA Section 404(c). To learn more, please click here to read the Alert published by the Employee Benefits & Executive Compensation Client Service Group on April 12, 2011.
Pension Plan Reporting of Foreign Bank and Financial Accounts
Representatives of pension plans with interests in foreign financial accounts may be required to report those accounts to the Internal Revenue Service. On February 24, 2011 the Treasury Department issued final regulations greatly expanding the reporting requirements for individuals and entities that hold interests in foreign accounts. To learn more about the regulations, please click here to read the Alert published April 12, 2011 by the Employee Benefits & Executive Compensation Client Service Group.
Department of Labor Extends Non-Enforcement Period for Certain Internal Claims and Appeals Requirements Applicable to Non-Grandfathered Plans Under the Affordable Care Act
On March 18, 2011, the Department of Labor issued Technical Release 2011-01 extending, with some modifications, the enforcement grace period established under DOL Technical Release 2010-02 until plan years beginning on or after January 1, 2012. To learn more the extension of the enforcement grace period, please click here to read the Employee Benefits and Executive Compensation Client Service Group’s Alert published March 21, 2011.
Reporting for Participants with Deferred Vested Benefits – IRS Replaces Schedule SSA
Plan administrators are required to report certain information regarding participants who separate from service with the right to a deferred vested retirement benefit. In Announcement 2011-21, the IRS designated Form 8955-SSA to be used to satisfy this reporting requirement, replacing Schedule SSA. To learn more about the filing requirements for the new form, please click here to read the Employee Benefits & Executive Compensation Client Service Group’s Alert published March 28, 2011.
Supreme Court Says Two Exemptions are Unavailable to Companies Trying to Protect Their Information from Disclosure under FOIA
Companies frequently find that information they submit to the Federal government is sought by others — perhaps competitors — under the Freedom of Information Act. The submitting company may be able to block the disclosure if the information falls within one of the exemptions in FOIA. On March 1 the Supreme Court made two of those exemptions unavailable to companies. To read more about the Court’s decision in FCC v. AT&T Inc. please click here to read the Government Contracts Team Alert published March 3, 2011
FTC Takes a Bite Out of Cookie-Based Behavioral Advertising
On March 14, 2011, the Federal Trade Commission announced a settlement with a behavioral advertising company that places cookies in consumers’ internet browsers to track online activities. This settlement marks one of the agency’s first enforcement actions against a behavioral advertising company and signals that the FTC has begun to act on its repeated warnings about scrutinizing behavioral advertising more closely. To learn more about the settlement, please click here to read the Consumer Protection Group’s Alert published March 17, 2011.
CPSC Opens Business Registration for New Consumer Product Safety Information Database
The new Consumer Product Safety Information Database is now available online on a trial basis, and will launch officially in March at www.SaferProducts.gov. The Database allows a broad range of people to file so-called “reports of harm” informing the CPSC about an incident or concern that the submitter believes is an indication a product is unsafe or potentially hazardous. To read more the database, please click here to see the Alert published by the Retail Team on February 3, 2011.
IRS Reverses Course — Breast Pumps and Other Lactation Supplies are Now Deductible Medical Expenses Subject to Reimbursement under FSAs, HRAs and HSAs
In Announcement 2011-14, the Internal Revenue Service concluded that breast pumps and supplies that assist lactation are medical care under Section 213(d) of the Internal Revenue Code and can therefore be reimbursed under a health flexible spending arrangement. To learn more about this announcement, please click here to read the Feburary 22, 2011 Alert published by the Employee Benefits & Executive Compensation Client Service Group.
Patent Reform Act of 2011
On January 25, 2011, The Patent Reform Act of 2011 was introduced by Senator Leahy (D-VT) with bipartisan support. The Bill is the latest installment of Congress’ attempts to pass patent legislation reform, following the Patent Reform Act of 2009 and other bills in recent years, all of which died in Congress. To learn more, please click here to read the February 22, 2011 Bulletin published by the Intellectual Property Client Service Group.
Wide-Open House Budget Debate Moves Toward Finish Line
The House continues to work towards completing a major budget bill to fund the federal government for the remainder of the 2011 fiscal year. Of the hundreds of amendments which have been offered and voted upon, major energy and environment-related amendments would reverse a law that requires the federal government to pay the legal costs of some environmental plaintiffs, de-fund the White House climate czar’s office, prevent an EPA appeals board from revoking air permits for oil exploration in the Arctic, and de-fund the EPA’s greenhouse gas emissions registry. To read more about the proposed amendments and other energy updates, please click here to see the February 18, 2011 Energy Update.
SEC Issues Final “Say-on-Pay” and “Golden Parachute” Rules
On January 25, 2011, the Securities and Exchange Commission released its final “say-on-pay” and related golden parachute rules to implement the provisions of Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. For a summary of the rules, please click here to read the Bulletin published by the Corporate Finance and Securities Group on January 27, 2011.
SEC Issues Proposed Rules for “Conflict Minerals” Disclosure
The Securities and Exchange Commission has issued proposed rules to implement the “conflict minerals” disclosure requirements in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1502 amended the Securities Exchange Act of 1934 (the “Exchange Act”) by adding Section 13(p). Section 13(p) requires the SEC to promulgate disclosure rules concerning the use of certain minerals that originate in the Democratic Republic of the Congo or its adjoining countries (the “DRC countries”). For more information on the proposed rules, please click here to read the Client Alert published by the Corporate Finance and Securities Client Service Group on January 3, 2011.
When All Appropriate Inquiry Isn’t Enough: Court Highlights the Significance of Other Factors in the Bona Fide Prospective Purchaser Defense
Anyone who has been involved in a real estate transaction relating to commercial or industrial property has likely dealt with conducting “All Appropriate Inquiry” into the site, which generally includes the preparation of a Phase I Environmental Site Assessment and may include Phase II sampling work. All Appropriate Inquiry (“AAI”) is one necessary component of the “bona fide prospective purchaser” (“BFPP”) defense established under the 2002 Brownfields amendments to Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The BFPP defense is intended to protect property owners from liability for contamination that clearly occurred prior to their period of ownership. However, conducting AAI is not the only prerequisite to establishing a BFPP defense. The BFPP requirements beyond AAI are highlighted in Ashley II of Charleston, LLC v. PCS Nitrogen, et al., 2010 U.S. Dist. LEXIS 104772 (D.S.C. Sep. 30, 2010), one of the first cases to address in detail the BFPP defense. To learn more about this case, please click here to read the Client Alert published by the Environmental Client Service Group on January 3, 2011.