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Arbitration Agreements Waiving Employees' Rights to Class & Collective Actions are Enforceable

 

by Jack B. HarrisonJack B. Harrison

On March 21, 2014, the U.S. Court of Appeals for the Eleventh Circuit, in Walthour v. Chipio Windshield Repair, LLC, et al., joined four other Circuit Courts of Appeals in holding that an arbitration agreement that waives the right of an employee to bring a class or collective action under the Fair Labor Standards Act (“FLSA”) is enforceable.  In so holding, the Eleventh Circuit joined the Second, Fourth, Fifth, and Eighth Circuits in giving employers support regarding the enforceability of class and collective action waivers.

In Walthour, the employees had signed arbitration agreements with their employer, under which they agreed to arbitrate all claims arising out of their employment and to pursue claims only individually, rather than collectively or as a class.  Additionally, the agreement at issue specifically waived the ability of the employees to bring a class action in the arbitration context.   However, even in the face of the agreement, once the employees’ employment ended, the employees brought a collective action against the employer under the FLSA.  In this lawsuit, the employees alleged that the employer failed to pay them the required minimum wage and overtime and failed to maintain records required by the FLSA.  The employer then filed a motion to compel arbitration based on the agreement that the employees had signed.  The federal district court granted the motion, a decision that was then appealed to the Court of Appeals.

After reviewing the language of the FLSA, its legislative history, and Supreme Court precedents interpreting the FLSA, the Court of Appeals dismissed the argument made by the employees that the right to bring a collective action under the FLSA is a non-waivable substantive right, concluding that there was no “congressional command” under which the FLSA had overridden the requirement of the Federal Arbitration Act (“FAA”) that collective action waivers in arbitration agreements were to be enforced.

Based on the FAA’s “liberal federal policy favoring arbitration agreements,” the Court of Appeals concluded that the agreements in question were enforceable under the FAA.  Based on multiple Supreme Court precedents (American Express Co. v. Italian Colors Rest. (2013); AT&T Mobility LLC v. Concepcion (2011); Gilmer v. Interstate/Johnson Lane Corp. (1991)), the Court of Appeals concluded that it was compelled to “rigorously enforce arbitration agreements according to their terms.” (quoting American Express Co. v. Italian Colors Rest.).

The importance of this decision for employers is that the Eleventh Circuit's decision in Walthour is consistent with decisions by other Courts of Appeals and with recent Supreme Court decisions regarding the enforceability of arbitration agreements that include waivers of class and collective actions by employees.  However, prudent employers should note that the NLRB continues to take the position that waivers such as this violate the rights of employees to engage in protected activity in concert under the National Labor Relations Act.  As a result, the NLRB continues to bring charges for unfair labor practice against employers that include class and collective action waivers in their arbitration agreements.

More Guidance on Background Checks from EEOC and the FTC

 

by Jack B. HarrisonJack B. Harrison

The U.S. Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) jointly released two documents regarding the use of background checks in the workplace on March 10, 2014.  These two documents, one aimed at employers and one aimed at employees and job applicants, can be located on the EEOC’s website.  The documents are titled: Background Checks: What Employers Need to Know and Background Checks: What Job Applicants and Employees Should Know.  While these documents offer very little new guidance, they do serve to remind employers of the “best practices” to be followed in the use of background checks in the employment context.

The documents do make it clear that “it’s not illegal for an employer to ask questions about an applicant’s or employee’s background, or to require a background check.”  However, they also caution employers that the use of background checks must comport with the federal Fair Credit Reporting Act (FCRA), if the background information is being obtained from a consumer reporting agency (CRA), as well as Title VII of the Civil Right Act of 1964.

Among the guidance offered employers in these documents is the following:

  • In all cases, make sure that you're treating everyone equally. It's illegal to check the background of applicants and employees when that decision is based on a person's race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, asking only people of a certain race about their financial histories or criminal records is evidence of discrimination.
  • Except in rare circumstances, don't try to get an applicant's or employee's genetic information, which includes family medical history. Even if you have that information, don't use it to make an employment decision. (For more information about this law, see the EEOC's publications explaining the Genetic Information Nondiscrimination Act, or GINA.) Don't ask any medical questions before a conditional job offer has been made. If the person has already started the job, don't ask medical questions unless you have objective evidence that he or she is unable to do the job or poses a safety risk because of a medical condition.
  • Apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older). For example, if you don't reject applicants of one ethnicity with certain financial histories or criminal records, you can't reject applicants of other ethnicities because they have the same or similar financial histories or criminal records.
  • Take special care when basing employment decisions on background problems that may be more common among people of a certain race, color, national origin, sex, or religion; among people who have a disability; or among people age 40 or older. For example, employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee. In legal terms, the policy or practice has a "disparate impact" and is not "job related and consistent with business necessity."
  • Be prepared to make exceptions for problems revealed during a background check that were caused by a disability. For example, if you are inclined not to hire a person because of a problem caused by a disability, you should allow the person to demonstrate his or her ability to do the job - despite the negative background information - unless doing so would cause significant financial or operational difficulty.
  • Any personnel or employment records you make or keep (including all application forms, regardless of whether the applicant was hired, and other records related to hiring) must be preserved for one year after the records were made, or after a personnel action was taken, whichever comes later. (The EEOC extends this requirement to two years for educational institutions and for state and local governments. The Department of Labor also extends this requirement to two years for federal contractors that have at least 150 employees and a government contract of at least $150,000.) If the applicant or employee files a charge of discrimination, you must maintain the records until the case is concluded.
  • Once you've satisfied all applicable recordkeeping requirements, you may dispose of any background reports you received. However, the law requires that you dispose of the reports - and any information gathered from them - securely. That can include burning, pulverizing, or shredding paper documents and disposing of electronic information so that it can't be read or reconstructed. For more information, see "Disposing of Consumer Report Information? Rule Tells How" at http://www.business.ftc.gov/documents/alt152-disposing-consumer-report-information-rule-tells-how.

Both the EEOC and FTC have made it clear that enforcement of Title VII and the FCRA remains a top priority.  Thus, employers who make use of background checks should review their processes, policies, and procedures to ensure that they comply with these laws.  Additionally, prudent employers should also review their respective state’s laws regarding the use of background checks to ensure that they are in compliance with those laws as well.

Voluntary Job Transfer = Adverse Employment Action? Maybe.

 

by Jack B. HarrisonJack B. Harrison

Can a lateral employment transfer, specifically one requested by an employee, be an adverse employment action that triggers potential liability for an employer under federal antidiscrimination laws?  In a recent decision, Deleon v. Kalamazoo County Road Commission, the United States Court of Appeals for the Sixth Circuit held that such a lateral transfer, even where initially requested by an employee, may be considered an adverse employment action when the terms and conditions of the transfer are intolerable.  In setting forth this standard, the Court of Appeals stated, a “transfer may constitute a materially adverse employment, even in the absence of a demotion or pay decrease, so long as the particular circumstances present give rise to some level of objective intolerability.”

In Deleon, the plaintiff was a fifty-three year old Hispanic male of Mexican descent.  He worked as an Area Superintendent for the defendant.  In this job, the plaintiff supervised road maintenance activities and repairs.  In 2008, the employee applied for the position of Equipment and Facilities Superintendent, which would have been a lateral transfer.  The plaintiff applied for this job because he believed that the position of Equipment and Facilities Superintendent would provide him with a better potential for career advancement.  The posting for the open position specifically described the working conditions in the position as “primarily in the office and in garage where there is exposure to loud noises and diesel fumes.”  While the plaintiff did not initially receive the position, the individual who did receive the position left it shortly thereafter. Upon not initially receiving the position, the plaintiff complained to his supervisors.  However, in 2009, the plaintiff was transferred to the Equipment and Facilities Superintendent position.  Shortly after receiving the position he had originally sought, the plaintiff began to complain about the diesel fumes and alleged that he suffered from bronchitis and sinus headaches as a result of the working conditions.  Ultimately, the employee was hospitalized for adverse health effects and stress that he attributed to his working conditions.  The plaintiff then took eight months of FMLA leave. When he was cleared to return to work, he discovered that his employer had already terminated him because he had exhausted his leave.

Following this, the plaintiff sued the employer asserting claims for race, national origin, and age discrimination.  In his Complaint, the plaintiff claimed that the job transfer was an adverse employment action, in that he was set up to fail.  In granting summary judgment to the employer, the District Court determined that transferring an employee to a position the employee applied for was not an adverse action.

On appeal, the Court of Appeals stated that generally reassignments without changes in salary, benefits, or title would not be considered an adverse employment action.  However, the Court of Appeals indicated that a job transfer could perhaps be considered an adverse employment action where it constitutes a constructive discharge.  Under this analysis, the Court of Appeals noted that for an employee to show that he/she had been constructively discharged as a result of a job transfer, the employee must show that the working conditions in the new position would be objectively intolerable to a reasonable person.  In this specific case, the Court of Appeals determined that the plaintiff had effectively shown that his working conditions were objectively intolerable.

In dissent, Judge Sutton describes the very difficult position employers now face.  As Judge Sutton stated: “Whatever the correct interpretation of the employment retaliation laws may be, they surely stop at this line: imposing liability on employers whether they grant or deny an employee’s request for a transfer.”  Judge Sutton further described the Hobson ’s choice now facing employers, where an employer gives an employee exactly what the employee requests, a job transfer, yet under the majority’s analysis, the employee may still have a cognizable claim. According to Judge Sutton, “It follows under the majority’s analysis that, when the employer denies what the employee wants, he also has a cognizable claim.”  

As a result of this decision, employers, defending a discrimination or retaliation claim, cannot simply assert that the employee previously requested the new position as an absolute defense to liability in a case where the employee is alleging that a transfer represents an adverse employment action.  It is possible that the employer in this case may appeal to the United States Supreme Court asking it to weigh in on this important issue.  Employers should follow these important developments and keep them in mind as they transfer employees laterally, even at the employee’s request.

New Guidance Issued by the EEOC on Religious Accommodation

 

by Jack B. HarrisonJack B. Harrison

As employers have become increasingly aware, Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment based on religion, including religious practices.  The result of this prohibition against religious discrimination is that employers are required to reasonably accommodate employees' sincerely held religious practices except in cases where such an accommodation would impose an undue burden on the employer.  Often, this results in an employer being forced to make exceptions to their existing policies and rules in the workplace.

Consistent with Title VII, the United States Equal Employment Opportunity Commission ("EEOC") recently provided employers with new guidance regarding religious workplace accommodations.  Religious Garb and Grooming in the Workplace: Rights and Responsibilities, issued by the EEOC, provides guidance to employers in accommodating employees religious requests and practices, including clothing, religious dress, head coverings, hair styles, and facial hair.  The document contains twenty-one case-specific examples of religious accommodation to guide employers.  According to the EEOC guidance:

Examples of religious dress and grooming practices include wearing religious clothing or articles (e.g., a Muslim hijab (headscarf), a Sikh turban, or a Christian cross); observing a religious prohibition against wearing certain garments (e.g., a Muslim, Pentecostal Christian, or Orthodox Jewish woman's practice of not wearing pants or short skirts), or adhering to shaving or hair length observances (e.g., Sikh uncut hair and beard, Rastafarian dreadlocks, or Jewish peyes (sidelocks)).

In the document, the EEOC points out that the number of religious discrimination charges filed against employers has nearly doubled since 2007.  As a result, the EEOC reminds employers that the definition of "religion" has been interpreted very broadly in the Title VII context, including religious beliefs that are "new, uncommon, not part of formal church or sect, only subscribed to by a small number of people or that seem illogical or unreasonable to others" or beliefs that are based on some non-theistic moral or ethical code or system.  The EEOC points out that "[b]ecause this definition is so broad, whether or not a practice or belief is religious typically is not disputed in Title VII religious discrimination cases."

Some of the case specific examples provided by the EEOC in the document include the following:

What if an employer questions whether the applicant's or employee's asserted religious practice is sincerely held?

Title VII's accommodation requirement only applies to religious beliefs that are "sincerely held." However, just because an individual's religious practices may deviate from commonly-followed tenets of the religion, the employer should not automatically assume that his or her religious observance is not sincere. Moreover, an individual's religious beliefs - or degree of adherence - may change over time, yet may nevertheless be sincerely held. Therefore, like the "religious" nature of a belief or practice, the "sincerity" of an employee's stated religious belief is usually not in dispute in religious discrimination cases. However, if an employer has a legitimate reason for questioning the sincerity or even the religious nature of a particular belief or practice for which accommodation has been requested, it may ask an applicant or employee for information reasonably needed to evaluate the request.

EXAMPLE 1 | New Observance

Eli has been working at the Burger Hut for two years. While in the past he has always worn his hair short, he has recently let it grow longer. When his manager advises him that the company has a policy requiring male employees to wear their hair short, Eli explains that he is a newly practicing Nazirite and now adheres to religious beliefs that include not cutting his hair. Eli's observance can be sincerely held even though it is recently adopted.

EXAMPLE 2 | Observance That Only Occurs at Certain Times or Irregularly

Afizah is a Muslim woman who has been employed as a bank teller at the ABC Savings & Loan for six months. The bank has a dress code prohibiting tellers from wearing any head coverings. Although Afizah has not previously worn a religious headscarf to work at the bank, her personal religious practice has been to do so during Ramadan, the month of fasting that falls during the ninth month of the Islamic calendar. The fact that Afizah adheres to the practice only at certain times of the year does not mean that her belief is insincere.

Can an employer exclude someone from a position because of discriminatory customer preference?

No. If an employer takes an action based on the discriminatory religious preferences of others, including customers, clients, or co-workers, the employer is unlawfully discriminating in employment based on religion. Customer preference is not a defense to a claim of discrimination.

EXAMPLE 3 | Employment Decision Based on Customer Preference

Adarsh, who wears a turban as part of his Sikh religion, is hired to work at the counter in a coffee shop. A few weeks after Adarsh begins working, the manager notices that the work crew from the construction site near the shop no longer comes in for coffee in the mornings. When the manager makes inquiries, the crew complains that Adarsh, whom they mistakenly believe is Muslim, makes them uncomfortable in light of the anniversary of the September 11th attacks. The manager tells Adarsh that he will be terminated because the coffee shop is losing the construction crew's business. The manager has subjected Adarsh to unlawful religious discrimination by taking an adverse action based on customer preference not to have a cashier of Adarsh's perceived religion. Adarsh's termination based on customer preference would violate Title VII regardless of whether he was correctly or incorrectly perceived as Muslim, Sikh, or any other religion.

Employers may be able to prevent this type of religious discrimination from occurring by taking steps such as training managers to rely on specific experience, qualifications, and other objective, non-discriminatory factors when making employment decisions. Employers should also communicate clearly to managers that customer preference about religious beliefs and practices is not a lawful basis for employment decisions.

Prudent employers should carefully review this document from the EEOC, as well as their existing policies and practices to insure that they are consistent with the EEOC guidance.  Additionally, many of the case specific examples provided by the EEOC should be incorporated in workplace training to insure that all employees, particularly managers and supervisors, understand what behavior is prohibited under Title VII. 

EPAs New Strategic Plan: Cuts in Enforcement While Promising Streamlined Methods of Compliance

 

David J. Schmittby David J. Schmitt

The  U.S. Environmental Protection Agency (“EPA”) recently released its“Draft FY 2014-2018 EPA Strategic Action Plan” (the “Plan”). Any parties interested in submitting comments need to do so by January 3, 2014.

  1. The Plan describes EPA’s five main strategic goals:
  2. Addressing climate change and improving air quality;
  3. Protecting America’s waters;
  4. Cleaning up communities and advancing sustainable development;
  5. Ensuring the safety of chemicals and preventing pollution; and
  6. Protecting human health and the environment by enforcing laws and assuring compliance.

The Plan also addresses four additional fundamental strategies that cut across all agency activities:

  1. Working toward a sustainable future;
  2. Working to make a visible difference in the communities;
  3. Launching a new era of State, tribal, local, and international partnerships; and
  4. Embracing EPA as a high-performing organization.

Within the Plan, each of these goals and strategies is discussed in great detail. For example, the goal of addressing climate change and improving air quality includes EPA’s priority goal to reduce greenhouse gas (“GHG”) emissions from new model vehicles and trucks by September 30, 2015.  This goal would potentially result in reducing GHG emissions by 6 billion tons and reducing oil consumption by about 12 billion barrels over the lifetime of the vehicles.  As another example, the goal of cleaning up communities and advancing sustainable development includes the benchmark of having 18,970 additional contaminated sites cleaned up and made available for use by 2015.  

Importantly however, the Plan also confirms that EPA is envisioning far fewer enforcement activities over the next five years.  Some primary examples of EPA’s reduced enforcement efforts going forward include:

  • Conducting only 70,000 federal inspections and evaluations by 2018, when 105,000 such inspections and evaluations had been conducted on average per year between FY 2005 and 2009;
  • Initiating only 11,600 enforcement cases by 2018, when 19,500 enforcement cases had been initiated on average per year between FY 2005 and 2009; and
  • Concluding only 10,000 enforcement cases by 2018, when 19,000 enforcement cases were concluded on average per year between FY 2005 and 2009.

EPA states in its Plan that its objective is to: “Pursue vigorous civil and criminal enforcement that targets the most serious water, air, and chemical hazards in communities to achieve compliance.”  EPA believes that addressing  the worst polluters first in identified sectors will result in less pollution, as well as fewer enforcement actions over time.  

Additionally, throughout the Plan, EPA stresses its intention to “modernize” how it functions. As the primary example, EPA envisions the use of “Next Generation Compliance” strategies and tools to improve compliance while reducing pollution.  

This Next Generation Compliance includes:

  1. Designing regulations and permits that are easier to implement, with a goal of improved compliance and environmental outcomes;
  2. Using and promoting advanced emissions/pollutant detection technology so that regulated entities, the government, and the public can more easily see quantified pollutant discharges, environmental conditions, and noncompliance;
  3. Shifting toward electronic reporting by regulated entities so that EPA has more accurate, complete, and timely information on pollution sources, pollution, and compliance, saving time and money while improving effectiveness and public transparency;
  4. Expanding transparency by making the information that EPA has today more accessible, and making new information obtained from advanced emissions monitoring and electronic reporting more readily available to the public; and
  5. Developing and using innovative enforcement approaches (e.g., data analytics and targeting) to achieve more widespread compliance. 

In discussing Next Generation Compliance EPA freely admits, “. . . [W]e are not there yet . . . it will take years to fully implement this transition.”

Senate Passes Employment Non-Discrimination Act

 

Jack B. Harrisonby Jack B. Harrison

On November 7, 2013, the United States Senate passed The Employment Non-Discrimination Act (“ENDA”) by a vote of 64-32.  ENDA would amend the Civil Rights Act of 1964 to prohibit discrimination in hiring and employment based on sexual orientation or gender identity.  This was the first time such legislation has passed the Senate. 

As passed, the bill would prohibit employers from treating applicants or employees differently based on the individual’s actual or perceived sexual orientation or gender identity (or the gender identity or sexual orientation of those with whom the individual associates).  As with charges of discrimination currently filed under Title VII, the Equal Employment Opportunity Commission (“EEOC”) would investigate charges of discrimination made under ENDA.

As passed by the Senate, ENDA applies to public and private employers and labor unions with at least 15 employees.  As written, ENDA would only apply prospectively, not retroactively.  In passing its version of ENDA, the Senate included a religious exemption that would specifically apply to religious institutions and entities. 

At the moment, twenty-one states and the District of Columbia, along with a number of cities and municipalities, have laws that prohibit discrimination based on sexual orientation or gender identity.  Additionally, many employers have voluntarily chosen to include protections for their employees against discrimination based on sexual orientation and gender identity within their own internal employment policies and procedures.

What is clear is that with the Supreme Court’s striking down a section of the Defense of Marriage Act, followed by actions by federal agencies implementing that decision, the landscape at both the federal and state level is evolving rapidly to create a workplace environment where discrimination based on sexual orientation or gender identity will be increasingly difficult to defend.

While expectations are that, with a Republican controlled House of Representatives, ENDA’s ultimate passage will not occur within the current Congress, prudent employers should take note of the rapidly evolving landscape in this area.  Employers, particularly those with employees across a number of states should pay careful attention to the changes that are occurring in this area and revise their handbooks and policies to ensure that they are compliant with state and federal law.  Additionally, these changes in the law in this area, at both the state and federal levels should be incorporated into all training provided for managers in the workplace.

USEPA Adjusts Environmental Civil Penalties Upward for Inflation

 

David J. Schmittby David J. Schmitt

Inflation hits everyone in their bank accounts on a regular basis. Just as the government periodically makes Cost-of-Living Adjustments (COLA) to Social Security and other benefits to account for inflation, so too does USEPA periodically adjust environmental civil penalties.

This is not just random cruelty by USEPA. The Federal Civil Penalties Inflation Adjustment Act of 1990 (28 USC 2461), as amended by the Debt Collection Improvement Act of 1996 (31 USC 3701), requires the agency to review and adjust civil penalties at least every four years. The purpose of the adjustment is to both maintain the deterrent effect of civil penalties and to further the policy goals of the underlying statutes.

The calculations involved include complicated analyses of the Consumer Price Index for all urban consumers (CPI-U) since the last adjustment, the raw inflation numbers, and several different rounding rules. For any true accounting wonks out there, the full calculation formula is included in the Federal Register Notice: http://www.gpo.gov/fdsys/pkg/FR-2013-11-06/pdf/2013-26648.pdf

So what is the bottom line impact of all of this?

First of all, the increased penalties will become effective on December 6, 2013.

Because of the rounding rules, a majority of environmental civil penalties remain the same. However, several individual penalties are increasing substantially and are worthy of note.

For example, the statutory maximum administrative penalty amounts that may be imposed under the Clean Air Act (CAA) §113(d)(1), 42 USC 7413(d)(1) and CAA § 205(C)(1), 42 USC 7524(c)(1) are increasing from $295,000 to $320,000.

Similarly, administrative penalties are being increased under the Emergency Planning and Community Right To Know Act (EPCRA), 42 USC 11045(b)(2) from $107,500 to $117, 500. This particular example may have an impact on those companies involved in the fracking boom taking place in eastern Ohio and neighboring states.

U.S. EPA recently confirmed that Ohio’s statutes governing the disclosure of the contents of fracking fluids, do not trump EPCRA. This means that going forward the oil and gas industry will have to file reports disclosing the contents of fracking fluids with the State Emergency Response Commission. The deadline for filing this information is now December 15, 2013. Failure to timely file the reports is one of the violations covered by the increased penalties.

Increases in administrative penalties are also slated under CERCLA (the Superfund Law), the Clean Water Act, and the Safe Drinking Water Act.

The attorneys at Cors & Bassett can answer any questions companies may have regarding any of these pending increases and how these statutes apply to you.

EPA May Seek to Expand Its Clean Water Act Jurisdiction

 

David J. Schmittby David J. Schmitt

On September 17, 2013, the United States Environmental Protection Agency (“EPA”) released a draft scientific study that links all streams (including intermittent and ephemeral streams), as well as associated wetlands with larger downstream navigable waters that are currently under the agency’s jurisdiction.

The draft study titled “Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence” concludes that there is ample evidence that

“All tributary streams, including perennial, intermittent, and ephemeral streams, are physically, chemically, and biologically connected to downstream rivers via channels and associated alluvial deposits where water and other materials are concentrated, mixed, transformed, and transported. Headwater streams (headwaters) are the most abundant stream type in most river networks, and supply most of the water in rivers.”

While this may seem like an esoteric ivory tower topic, it may have a large real world impact. Currently, the jurisdiction (and permitting authority) of the EPA and Army Corps of Engineers (“COE”) extends only to traditional navigable waters, wetlands adjacent to traditional navigable waters, non-navigable, but relatively permanent tributaries of navigable waters that flow year-round or have continuous flow at least three months of the year, and wetlands that directly abut such tributaries.

The EPA commented that the draft study provides the first comprehensive link between headwater streams, which are the most abundant type of streams in the U.S. and downstream navigable waters. The study, now being reviewed by the EPA Science Advisory Board, will serve as the scientific basis for a new rule developed jointly by the EPA and COE to clarify Clean Water Act jurisdiction. Based on the study’s conclusions, the EPA and COE could propose bringing all intermittent and ephemeral streams and all wetlands in flood plains and riparian areas, including those that abut intermittent and ephemeral streams, under federal protection.

If this occurs, it will dramatically enlarge EPA’s and COE’s jurisdiction and permitting authority and could lead to a large increase in the number of construction and other projects required to obtain CWA permits prior to working in these areas.

Companies in the industrial and residential construction sectors, as well as any businesses which anticipate any new construction or site modification activities in the coming years stand the greatest chance of being impacted. Cors & Bassett will continue to monitor the development of the coming proposed rule and will keep its clients abreast of the latest information.

The study itself may be found at: http://tinyurl.com/ldn73to

Ohio Bureau of Workers' Compensation Planning a Move to Prospective Payment

 

David J. Schmittby David J. Schmitt

Ohio employers currently pay their workers’ compensation premiums “retrospectively.” This means that when employers write a check for their workers’ compensation premium, they are paying for the previous six months of coverage, or in “arrears.” For example, private employers paid in February 2013 for the July 1, 2012 to December 31, 2012 coverage period.

Prospective billing is an industry standard and builds upon ongoing efforts by BWC to modernize its operation. Under prospective billing, BWC would, like most insurance companies, collect employer premiums for the upcoming policy period. In other words, employers will make upfront payments to BWC for their workers’ compensation coverage.

Potential Benefits of Prospective Payment:

The BWC believes that a switch to a prospective billing system could provide the following benefits to Ohio employers:

  1. Opportunities for more flexible payment options (e.g., monthly, quarterly, yearly) with possible discounts for those who pay a year in advance for example.
  2. Ability to better anticipate budgetary impacts of workers’ compensation coverage, especially for public-taxing districts.
  3. Better opportunities for BWC to provide quotes online or via phone.
  4. Fewer costs from employers who either don’t pay premiums timely or have workers injured without coverage being mutualized among employers in good standing.
  5. Moving to prospective payment also increases BWC’s ability to detect employer non-compliance and fraud.

Transition

The legislature has given BWC the authority to pursue prospective billing, meaning the switch could occur as early as late 2014. Prior to switching, BWC plans to ask its Board of Directors to authorize a credit for all employers equal to the full amount of six months’ premium. This would allow employers to make their first prospective payment without worrying about also having to pay their last retrospective payment. This would equate to an estimated $900 million savings to businesses. In addition, this switch would result in rate reductions of 2 percent for private employers and 4 percent for public employers.

Cors & Bassett will continue to monitor this BWC initiative and inform employers when to expect these savings to occur

Product Liability Alert: California Imposes New Regulations Regarding Chemical Composition of Consumer Products

 

David J. Schmittby David J. Schmitt

Companies that manufacture or retail products in California should be aware of this new California statute and associated regulations.

On October 1, 2013, the Safer Consumer Products Act took effect in California, imposing new requirements on product manufacturers, importers and even retailers and assemblers of products, regarding the components of certain consumer products. The regulations are codified in Title 22, Division 4.5, Chapter 55 of the California Code of Regulations and will be administered by the Department of Toxic Substances Control ("DTSC").

The stated purpose of the Act is to require responsible entities "to seek safer alternatives to harmful chemical ingredients in widely used products." The DTSC's first responsibility under the Act is to identify candidate chemicals, or chemicals that have been identified as harmful by California, federal and international agencies. Within 180 days, the DTSC must create a list of priority products, consisting of no more than five products to which the Act's regulations will apply. This priority products list will be updated at least once every three years. A "priority product" need not be narrowly-defined, but may be as general as a "laundry product," encompassing a variety of consumer products. The DTSC will publish its lists of priority products and candidate chemicals on its website.

When a priority product contains a candidate chemical, the chemical is deemed a chemical of concern ("CoC"). A responsible entity ("entity") – one whose consumer product contains a CoC – must notify the DTSC within 60 days to identify itself and provide a list of brands containing the subject CoC. An entity thereafter faces three alternatives: (1) stop California distribution of the consumer product; (2) remove the CoC from the product; or (3) conduct an alternative analysis to demonstrate whether there is a feasible, less harmful replacement chemical.

The Act provides for DTSC supervision over the entity's choice. The entity must, for example, notify the DTSC if it opts to stop distribution in California, if it removes the CoC from its product or if it replaces the CoC with another chemical. If the entity retains the CoC in the product, the entity must submit a preliminary analysis to the DTSC detailing the reasons for which the CoC must remain in the product in lieu of alternative chemicals.

This preliminary analysis is supplemented by a final alternative analysis, after which the DTSC determines the appropriate action. The DTSC may decide to require the entity to inform consumers that the product contains the chemical or to restrict the sale of the product. The DTSC may even prohibit distribution and sale of a product even if no alternative chemical exists.

At present, unlike Proposition 65 enforcement, citizens are not entitled to bring a private right of action, on behalf of an individual or the general public. Rather, the DTSC is responsible for the Act's enforcement. Any entity that has violated a regulation will be listed on the DTSC's Failure to Comply List on its website. A violation may also result in the DTSC's imposition of a fine or criminal penalty as determined by the Health and Safety Code. A product may be exempt from compliance, however, where the CoC is below a certain threshold, as long as the CoC is a naturally-occurring contaminant of the product. A product may also be exempt if it is made up of more than 100 subparts, as long as the product is not a children's product or clothing.

Although the Act has been criticized by some for its weak enforcement and penalty measures, it is still significant for product manufacturers and other entities who manufacture, sell and distribute their consumer products in California. These entities should remain informed of the DTSC's priority products and candidate chemicals lists. If an entity's product contains a CoC, it is the entity's responsibility to ensure compliance with the Act's provisions.

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