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.
Oil and Natural Gas Production Subject to New Air Rules
On April 17, 2012, the EPA issued new rules targeting potential emissions associated with hydraulically fractured wells. Other activities at upstream and midstream facilities are also impacted by the new rules. To learn more about the new requirements to reduce emissions from the oil and natural gas production sector, please click here to read the Alert published by the Environmental and Energy and Natural Resources Client Service Group on May 1, 2012.
Medical Marijuana: Arizona Law and the Americans with Disabilities Act
While employers have implemented policies to comply with Arizona’s medical marijuana laws, the federal Ninth Circuit Court of Appeals has issued a ruling that could exclude employees who use medical marijuana from protection under the Americans with Disabilities Act. To read more about the ruling and the context of the issue considered by the Court, please click here to read the Alert published by the Labor and Employment Client Service Group on May 30, 2012.
Department of Labor Issues Further Fee Disclosure Guidance
On May 7, 2012, the Department of Labor issued Field Assistance Bulletin 2012-02, consisting of 38 questions and answers that clarify some of the issues raised since the issuance of final regulations on participant fee disclosures with respect to designated investment alternatives in individual account plans. For a discussion of the issues covered, please click here to read the alert published by the Employee Benefits and Executive Compensation Client Service Group on May 29, 2012.
California Supreme Court Attempts to Clarify Entitlement to Attorneys’ Fees in Wage and Hour Claims
On April 30, 2012, the California Supreme Court issued its ruling in Kirby v. Imroos Fire Protection, a wage and hour matter that had been making its way through the court system since 2007. In the ruling, the Court attempted to clarify and limit a prevailing party’s entitlement to attorneys’ fees for bringing certain types of wage and hour claims; however, its failure to address a glaring inconsistency with another law essentially nullifies the holding. To read more about the ruling and how it further muddies the waters as to whether any party will receive fees for break claims, please click here for the Alert published by the Labor and Employment Client Service Group on May 8, 20012. (more…)
IRS Releases Proposed Rules on New Comparative Effectiveness Fee for Health Plans
On April 12, 2012 the IRS released proposed regulations regarding the collection of the fee for the Patient-Centered Outcomes Research Trust Fund (the “Fund”) under the Patient Protection and Affordable Care Act. The Fund will be used to pay for the Patient-Centered Outcomes Research Institute which has the goal of helping health care providers and consumers make informed health decisions by synthesizing research comparing the outcome effectiveness of various treatments. To learn more about proposed regulations, the plans that will be impacted and the fee, please click here to read the Alert published by the Employee Benefits and Executive Compensation Client Service Group on April 23, 2012.
The Absolute Priority Rule: An Endangered Species in Individual Chapter 11 Cases?
The absolute priority rule of Section 1129(b) of the Bankruptcy Code is a fundamental creditor protection in a Chapter 11 bankruptcy case. The rule implements the general state-law principle that creditors are entitled to payment before shareholders unless creditors agree to a different result. Recent litigation has raised the issue of whether the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which otherwise is a very creditor-friendly statute, modified the Bankruptcy Code in such a way as to eliminate the absolute priority rule if the debtor is an individual. For a discussion of the issue, please click here to read the Alert published by the Bankruptcy, Restructuring and Creditors’ Rights Client Service Group on April 9, 2012.
Estate Planning in 2012
Generally, there are three basic goals of estate, generation skipping transfer and gift tax planning: (1) the reduction of estate and gift taxes upon transfer; (2) the deferral of the estate, generation skipping transfer and gift tax burden; and (3) ensuring for the necessary liquidity to pay the taxes when they become due. As a result of the present low interest rates and the drop in value of most types of assets, there may be opportunities to engage in some estate planning that may not be available to clients when interest rates rise and values are driven higher. To learn about how to take advantage of these opportunities in 2012, while we are sure we have them, please click here to read a memorandum published by Bryan Cave’s Private Client Group on April 10, 2012.
Data Breaches: Will You Be Sued, And Can You Lower Risk?
According to a widely reported study, 90% of organizations have had at least one data breach in the last year and almost 60% had two or more breaches over the year. In light of headlines describing multimillion-dollar data security breach settlements, it is no surprise that businesses fear the worst. For a discussion of the litigation risks, range of liability and how businesses can lower the risks associated with security breaches, please click here to read an article written by the Data Privacy and Security Team attorneys and published in Law 360 on April 25, 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.
FINRA Issues Guidance on Protection of Customer Accounts
A recent alert from the Financial Industry Regulatory Authority (“FINRA”) is encouraging broker-dealers to reexamine their policies and procedures relating to protection of customer assets and accounts. FINRA Regulatory Notice 12-05 advises broker-dealers that FINRA has received an increasing number of reports of customer funds being stolen as a result of instructions e-mailed to firms from customer e-mail accounts that have been compromised. With that notice, FINRA also issued an Investor Alert advising the public about the reported incidents. To learn more about the Notice and Alert, please click here to read the Alert published by the White Collar Defense & Investigations and Securities Litigation & Enforcement Client Service Groups and Data Privacy & Security Team on February 6, 2012.
Reporting Cybersecurity Risks — New Obligations for Publicly Traded Companies
Most companies are aware that they may be required to report data security breaches to consumers and, in some instances, state attorneys general, the FTC, or HHS. Publicly traded companies should bear in mind that they have to notify another group — their investors. The SEC last year offered first-of-its kind guidance on when companies should report cybersecurity incidents in their disclosure statements. To learn more about the new requirements, please click here to read the Alert published by the Data Privacy & Security Team on February 14, 2012.
DOL Issues Final Fee Disclosure Rule
Earlier this year, the Department of Labor issued a final rule on the disclosure requirements for a contract or arrangement for services to a covered plan to be deemed “reasonable” under Section 408(b)(2) of the Employee Retirement Income Security Act of 1973 (“ERISA”). These disclosure requirements become effective July 1, 2012 and apply to service contracts and arrangements entered into both before and after that date. To learn more about the disclosures required and what plans or contracts may be excluded from the rule, please Click here to read the Alert published by the Employee Benefits and Executive Compensation Client Service Group on February 7, 2012.
SEC and FINRA Issue Guidance on Broker Dealer Branch Inspections
Broker-Dealers who face inspections from regulators should take heed of recent guidance provided by the two principal securities regulatory agencies. The regulators are the Financial Industry Regulatory Authority (“FINRA”) and the SEC’s Office of Compliance Inspections and Examinations. Their jointly issued “National Examination Risk Alert” offers guidance on policies and procedures that broker-dealers should consider for branch office inspection programs. To learn more, please click here to read the Alert published by the White Collar Defense & Investigations and Securities Litigation & Enforcement Client Service Groups on December 13, 2011.
State Taxation of Former Residents’ Retirement Income
Recently, the New York State Department of Taxation and Finance issued an Advisory Opinion regarding whether New York State may impose income tax on distributions from a nonqualified deferred compensation plan made to a former resident. The opinion, consistent with federal law, concluded that New York State may not impose tax on these retirement payments. To read more about the Advisory Opinion, please click here for the Alert published by the Employee Benefits and Executive Compensation Client Service Group on December 28, 2011.
Reminder Regarding Information Reporting For Corporate Actions That Affect Stock Basis
Issuers of securities who undertook an “organizational action” in 2011 that affected the basis of such securities are required to file an information return reporting such action. The Information Return for actions taken in 2011 was due to be filed January 17, 2012 for actions taken in 2011. For more information on timing of returns for actions in 2012 and subsequent years, please click here to read the Tax Advice and Controversy Client Service Group Bulletin published December 30, 2011.
NLRB Postpones Effective Date of “Employee Rights” Posting Requirement
The National Labor Relations Board announced on October 5, 2011, the decision to postpone until January 31, 2012 the effective date of its recently published rule requiring employers to post notices informing employees of their rights under the National Labor Relations Act. The NLRB finalized its new notice-posting requirement in August and at that time announced that the rule would take effect on November 14, 2011. However, federal lawsuits were filed challenging the rule and prompting many questions and uncertainty from employers across the nation. To learn more about the rule, please click here to read the Alert published by the Labor & Employment Client Service Group on October 6, 2011.
The Computer Fraud and Abuse Act (CFAA) — The Benefits of a Computer Use Policy That Restricts Employee Access
Employers that provide employees unfettered access to company computer systems may unwittingly forfeit a valuable statutory remedy against the misappropriation of electronic data. Such employers should ensure that they have a computer use policy in place that explicitly distinguishes between authorized and unauthorized use. To learn more about the Act and the federal avenue it provides to pursue employees who have misappropriated electronic information, please click here to read the Alert published by the Labor & Employment Client Service Group on October 27, 2011.
Qualified Retirement Plan Limits for Calendar Year 2012
The IRS has announced its 2012 cost-of-living adjustments for retirement plans. To access a chart reflecting the qualified plan limits for calendar years 2009-2012, please click here for the Alert published by the Employee Benefits & Executive Compensation Client Service Group on October 24, 2011.
FINCEN Issues a Notice of Proposed Rulemaking Requiring Cross-Border Report for Prepaid Cards
The Financial Crimes Enforcement bureau has released a proposed rulemaking that would require consumers holding prepaid cards aggregating more than $10,000 in value to report the cards when crossing into or out of the U.S., in the same way that they report cash, travelers checks and other monetary instruments. Please click here to read the Alert published by the Financial Institutions Client Service Group on October 18, 2011.
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.