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EPA Proposes Restrictions to State Water Quality Certifications /

EPA Proposes Restrictions to State Water Quality Certifications

A proposed rule issued August 9th appears to move in a different direction from the approach to cooperative federalism promoted by recent EPA initiatives.  EPA’s new Water Quality Certification rule seeks to restrict the authority of states and authorized tribal agencies – at least with respect to certain actions under the Clean Water Act. This is a rule to watch for utilities and businesses seeking licenses from the Federal Energy Regulatory Commission, and for developers who need Clean Water Act Section 404 permits from the Army Corps of Engineers.

Section 401 of the Clean Water Act Section gives states and authorized tribes the authority to assess the potential water quality impacts of discharges from federally permitted or licensed projects that may affect navigable waters.  This certification process is triggered by a range of federal permitting and licensing decisions.  Significantly, the Water Quality Certification is the mechanism by which state and tribal permitting agencies provide input to the Army Corps of Engineers’ issuance of Clean Water Action Section 404 Dredge and Fill permits and the Federal Energy Regulatory Commission’s hydropower and pipeline licensing process.

According to EPA, the proposed rule is “intended to increase the predictability and timeliness of section 401 certification by clarifying timeframes for certification, the scope of certification review and conditions, and related certification requirements and procedures.” (August 9th News Release)

As compared to past practice, including actions upheld by the U.S. Supreme Court, the newly proposed rule would narrow the scope of what a state or tribal authority could consider or require as part of a certification.  Under the new rule, a certifying authority’s evaluation and any actions directed as part of a certification decision, would be limited to:

  • Considerations of water quality only: States could no longer consider the effects on, or require actions regarding matters outside water quality, for example air quality or public access to waters.
  • Water quality impacts from the potential discharge associated with a project: States could not consider or mitigate potential impacts from the project generally, but must evaluate and address only the discharge to water.
  • Water quality impacts to waters of the United States resulting from a point source discharge: Impacts from run-off or indirect discharges could not be considered.

Additionally, the proposed rule more firmly defines the timeline.  The statute and existing regulations require that a state or other certifying authority must act within a “reasonable period of time,” which shall not exceed a year.  The proposed rule would direct federal agencies to establish the “reasonable period of time” for a given review and provides that there is no tolling provision to stop the clock at any time.  The failure to issue or deny certification within the time set, or one year at the most, will result in a waiver of the certification requirement.

EPA developed the proposed rule in response to the Administration’s April Executive Order on Promoting Energy Infrastructure and Economic Growth.  The proposed rule follows on guidance issued in June pursuant to the Executive Order.

The proposed rule, Updating Regulations on Water Quality Certification, will be open for public comment for 60 days. Companies seeking federal licenses or Clean Water Act Section 404 permits should evaluate the proposed rule, including those topics EPA has specifically identified for input, and consider whether there are topics that warrant comment.

EPA has indicated that the anticipated timeline for finalizing the rule is May 2020.

This post was drafted by Jessica Merrigan, an attorney in the Kansas City, MO office of Spencer Fane LLP. For more information, visit spencerfane.com.

Colorado Mining Operations Face Temporary Cessation Roadblock

Case of First Impression Overturns Mined Land Reclamation Board Ruling

On July 25, 2019, the Colorado Court of Appeals reversed a ruling of the Colorado Mined Land Reclamation Board (“MLRB” or “agency”) which had authorized a second period of temporary cessation for a uranium mine.  The Court in Information Network for Responsible Mining, Earthworks, and Sheep Mountain Alliance v. Colorado Mined Land Reclamation Board was asked to determine if the agency properly authorized a “second period of temporary cessation” which would allow the mining permit issued by the MLRB to remain in effect.

The Role of States in Environmental Enforcement – EPA Issues Final Policy Outlining State Responsibility

Continuing its focus on cooperative federalism under the current Administration, EPA issued its final policy on Enhancing Effective Partnerships Between the EPA and the States in Civil Enforcement and Compliance Assurance Work on July 11, 2019.  EPA’s guidance memorandum follows review of comments from the draft policy published in May 2019 and replaces the January 2018 interim guidance on enhancing partnerships.  EPA’s final policy expands and clarifies earlier direction on communication planning between EPA and its state counterparts with authorized or delegated programs under various federal statutes such as the federal Clean Air Act, Clean Water Act, and RCRA.

Takings Claims in Federal Court

Affected by a local government just compensation action? Your remedies have now changed significantly. The Supreme Court on June 21, 2019 overturned 35 years of precedent. In Knick v. Township of Scott, Pennsylvania the Court held that you can now take your federal takings claims pursuant to 42 U.S.C. § 1983 directly to federal court without exhausting state court remedies.

Minnesota Employers: Don’t be Caught Off Guard

All companies and organizations with Minnesota-based employees must update their employment policies and practices due to recent state law changes going into effect on July 1, 2019.  These updates are necessary due to the Minnesota Legislature’s passage of a law imposing new recordkeeping and notice requirements intended to protect all employees working in Minnesota.  These new requirements are catching many employers off guard due to the lack of publicity for the new law and the short period to achieve compliance.

SEC Adopts Rulemaking Package – “Solely Incidental” Broker-Dealer Exclusion

On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that applies to investment advisers and broker-dealers.

This is the fourth in a series of articles describing the SEC’s rulemaking package.  This article addresses the SEC’s Interpretation of the “Solely Incidental” Broker-Dealer Exclusion.  That exclusion allows broker-dealers to provide certain advisory services without becoming subject to regulation as investment advisers under the Advisers Act, as long as those services are “solely incidental” to the broker-dealers’ core business.  The SEC’s new interpretation of this exclusion provides some helpful guidance for broker-dealers and dually-registered firms.

SEC Adopts Rulemaking Package – Form CRS

On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that applies to investment advisers and broker-dealers.  These rules include a new set of disclosure requirements to address retail investor confusion over brokerage and investment advisory services.

This is the third in a series of articles describing the SEC’s rulemaking package.  This article provides an overview of the Form CRS – Relationship Summary portion of the package.

Missouri Proposes to Reduce Reporting Timeframe for Start-Up, Shutdown, and Malfunction Conditions

Facilities that own and operate air emissions sources in the State of Missouri, such as manufacturing plants, chemical plants, and similar industrial air sources, will want to take note of recent proposed changes to the notification obligations involving certain excess emission events.

SEC Adopts Rulemaking Package – Investment Adviser Standard of Conduct

On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that applies to investment advisers and broker-dealers.  In a series of four articles, Spencer Fane LLP outlines the SEC’s rulemaking package.  Our first article summarized “Regulation Best Interest” a new standard of conduct governing broker-dealers.  In this second article, we describe the SEC’s interpretation of the standard of conduct that applies to investment advisers when they engage with their clients.

SEC Adopts Rulemaking Package – Regulation Best Interest

On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that is applicable to investment advisers and broker-dealers.  The package includes two final rules and two interpretations – Regulation Best Interest, Investment Adviser Standard of Conduct Interpretation, Form CRS – Relationship Summary, and Solely Incidental Broker-Dealer Exclusion Interpretation.  The Regulation Best Interest and Form CRS requirements are effective 60 days after they are published in the Federal Register, with a transition period for compliance that ends on June 30, 2020.  The SEC’s interpretations are effective immediately upon publication in the Federal Register.  In a series of four articles, Spencer Fane LLP outlines the SEC’s rulemaking package.  This first article describes the Regulation Best Interest portion of the SEC’s package.

SCOTUS Holds that Title VII’s Charge-Filing Procedures Are Subject to Waiver

On June 3, 2019, the Supreme Court held that filing a charge of discrimination is not a “jurisdictional” prerequisite to filing suit under Title VII of the Civil Rights Act of 1964. See Fort Bend County v. Davis, Slip Op. No. 18-525 (June 3, 2019).  Although this case deals with what sounds like an obscure legal issue, it is of great practical importance to employers. In short, it means that employers defending against claims of discrimination under Title VII must diligently assert all procedural defenses they may have as early as possible. Otherwise, a failure to assert a defense may allow the plaintiff-employee’s claim to go forward, even if the employee has not technically complied with Title VII’s mandatory charge-filing procedures.

One Key Takeaway from $3 Million Penalty by HHS for Exposing 300,000 Patient Records

The United States Department of Health and Human Services reached an agreement with Touchstone Medical Imaging in which Touchstone agreed to pay $3 million and adopt a corrective action plan in the wake of its data breach that exposed over 300,000 patients’ protected health information.

Supreme Court Sheds Light on Class Arbitrations

The Supreme Court has further closed the window for employees to pursue class-wide claims against their employers in arbitration.  In 2010 the Supreme Court ruled a court may not compel arbitration on a class-wide basis when the arbitration agreement is “silent” on the issue.  Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010).  Nine years later, presented with an arbitration agreement that, instead of silent, was “ambiguous” regarding the availability of class arbitration, the high court has again demonstrated its preference for individual arbitration.  In Lamps Plus, Inc. v. Varela, Case No. 17-988 (slip opinion April 24, 2019), the Court held that ambiguity cannot provide the basis for finding consent to participate in class arbitration.

Fish and Wildlife Proposes Downgrading American Burying Beetle Status From “Endangered” to “Threatened”

After years of studies, Congressional pressure, and on-the-ground experience with the American Burying Beetle, the U.S. Fish and Wildlife Service proposed downgrading the beetle’s status from “Endangered” to “Threatened.” In addition to this move, Fish and Wildlife has proposed a rule that would tailor protections that are necessary for the beetle to recover under section 4(d) of the Endangered Species Act.

DOL Publishes Proposal Interpreting Joint Employer Status

On April 1, 2019, the Department of Labor (“DOL”) published its third proposal in 30 days to revise regulations interpreting the Fair Labor Standards Act (“FLSA”). The April 1 proposed rule would revise and clarify the test for when multiple employers (known as “joint employment”) can be held responsible for wages under the FLSA. The notice and full text of the rule can be found here.

Structuring Physician Relationships After Forest Park

If a relationship with physicians or other referral sources has been structured to carve out Medicare and Medicaid patients to avoid triggering Anti-Kickback Statute requirements, it is time to review the compliance of the relationship.

Dating Application Triggers National Security Concerns

You read it correctly:  The United States Government has deemed an online dating application to be a national security concern. The dating application Grindr has earned notoriety for being the gay equivalent to Tinder (a dating “hook up” application for straight people). Grindr has gained remarkable success. The application boasts of having 27 million registered users as well as an average of 3.3 million daily users.

DOL Publishes Proposals Interpreting “Regular Rate of Pay” in Overtime Regulations

Under the Fair Labor Standards Act (FLSA), employers must generally pay non-exempt employees overtime at a rate of one and one half times the “regular rate” of pay when they work more than forty hours in a workweek. Overtime cannot be properly calculated unless the employer knows what to include in the regular rate.  As benefits, bonuses, reimbursements and other elements of compensation have evolved, greater ambiguity has developed in determining what is included in and excluded from the regular rate.  On March 29, 2019, the Department of Labor (“DOL”) published a proposal (found here) to clarify and update several regulations that interpret the regular rate of pay requirement.

Does the CCPA Apply to My Company?

Late last year California passed the California Consumer Privacy Act of 2018 (“CCPA”) aimed at granting certain rights and protections to California consumers and also imposing obligations and limitations on businesses in an effort to provide consumers more control over their personal information. The CCPA becomes effective January 1, 2020, and companies across the nation are marking their calendars in anticipation of privacy practice changes reminiscent of those ushered in by the European Union’s GDPR last year. Although the CCPA is often compared to the GDPR, the two privacy laws are different and compliance with one does not ensure compliance with the other. In undertaking compliance measures, the initial inquiry companies should analyze is the question of whether the CCPA applies to the company.

Department of the Interior amends Greater Sage-Grouse Management Plans

The Department of the Interior recently announced six new Records of Decision that amend Resource Management Plans for the Greater Sage-Grouse.

Maintaining Compliance with Substance Use Disorder Information

Does your organization provide substance use treatment services or receive information from a treatment program that identifies an individual as having a substance use disorder?  If so, your organization may be subject to 42 C.F.R. Part 2 and may have obligations to amend contractual provisions to maintain compliance.

New FMLA and FLSA Opinion Letters Issued by DOL on Key Topics

On March 14, 2019, the U.S. Department of Labor/Wage and Hour Division continued its practice under the Trump Administration of issuing Opinion letters by releasing three new ones – its first Opinion letters of 2019.  One of the newly-released Opinion letters relates to the Family and Medical Leave Act (“FMLA”), and two of them involve the Fair Labor Standards Act (“FLSA”).

ABA Explains Lawyers’ Ethical Obligations for Data Security and Data Breach

Lawyers, like others in business, must comply with the data security and data breach notification laws of the 50 states that are applicable to their practices. But, according to the American Bar Association, their obligations do not end there. On October 17, 2018, the ABA issued Ethics Opinion 483 titled Lawyers’ Ethical Obligations After an Electronic Data Breach or Cyberattack

DOL Publishes Proposal on New White-Collar Exemption Regulations

On March 7, 2019, the Department of Labor (“DOL”) published a long-awaited proposal for revising the regulations relating to the white-collar exemptions from overtime and minimum wage under the Fair Labor Standards Act (“FLSA”). In the Notice of Proposed Rulemaking (“NPRM”), DOL has proposed increasing the threshold salary amount for certain white-collar exemptions from its current $455 per week (or $23,660 per year) to $679 per week, or ($35,308 per year). In 2015, DOL had proposed increasing this threshold to over $47,000 per year ($913 per week). As we reported here, that proposal was blocked by a federal court in Texas in late 2016.

Army Corps Seeks to Accelerate Wetlands Permitting with New Mitigation Bank Guidance

Mitigation bank credits may become more readily available to builders, developers and other permittees following new guidance issued in late February.  The U.S. Army Corps of Engineers issued Regulatory Guidance Letter 19-01, developed in collaboration with the U.S. Environmental Protection Agency, on February 22, 2019. (Available here)

Revisit Privacy Notices for the New Year

Consumer-facing privacy notices carry legal consequences and a carefully drafted privacy notice may function to save a company in data privacy litigation or regulatory actions. Accordingly, several reasons exist for companies to frequently revisit privacy notices.

The Supreme Court Remands the Ninth Circuit’s Pay Bias Decision Due To Judge Reinhardt’s Death

On February 25, 2019, the United States Supreme Court vacated a decision previously decided by the full Ninth Circuit because it was filed after Judge Stephen Reinhardt, who authored the opinion, died. In the case, Rizo v. Yovino, the Ninth Circuit held that employers could not rely upon an employee’s prior salary as a “factor other than sex” in defending against a claim under the Equal Pay Act. We discussed the Ninth Circuit’s decision here. Notably, the Ninth Circuit was the only federal circuit court to decide that employers could never rely upon salary history as a factor other than sex. All eleven judges (including Judge Reinhart) in the Ninth Circuit had agreed that prior law should be overturned, and that the employer’s utilization of salary history alone to set salaries was impermissible.

Yahoo! Data Breach Settlement Increases Risk for Companies’ Directors and Officers

The recent Yahoo! settlement marks a substantial step in data breach shareholder derivative litigation that increases the risk for officers and directors of companies that have a data breach. On January 9, 2019, Yahoo! Agreed to pay a total of $29 million to its shareholders to settle a lawsuit against several former directors and officers alleging that their poor management of the company led to the data breaches which substantially impacted the company’s value.

Illinois: Land of 12 Million Biometric Privacy Regulators

The Supreme Court of Illinois recently held that every Illinois citizen has a private right of action to enforce violations of the Illinois Biometric Information Privacy Act (“BIPA”) without alleging or showing actual harm. Businesses collecting, using and storing the biometric data of Illinois consumers take notice:  there are over 12 million regulators with the power to enforce this law against you. But don’t worry too much, the state’s high court promises that “Compliance should not be difficult.”

Texas Businesses Must Implement and Maintain Reasonable Cybersecurity Safeguards According to State Attorney General

Texas law requires businesses to implement and maintain reasonable cybersecurity, which they should do so with a written program for managing cyber risk and protecting sensitive customer information. This warning came from the state’s Attorney General following his office’s $1.5 Million settlement with Neiman Marcus over its 2013 data breach.

Cyber Hygiene Checklist

“[T]he relevant inquiry here is a cost-benefit analysis, that considers a number of relevant factors, including the probability and expected size of reasonably unavoidable harms to consumers given a certain level of cybersecurity and the costs to consumers that would arise from investment in stronger cybersecurity.”
– FTC v. Wyndham, (3rd Cir. Aug. 24, 2015)

Pennsylvania Employers Have a Duty to Safeguard Employees’ Data, Says High Court

Late last year, the Supreme Court of Pennsylvania ruled that employers have a legal duty to safeguard employee’s sensitive personal information stored on an internet-accessible computer system and that the state’s economic loss doctrine allowed the plaintiffs in Dittman to recover for purely monetary damages. 

Missouri Low-Income Housing Tax Credit Outlook – 2019 Legislative Update

The Missouri Housing Development Commission Board (“MHDC Board”) failed to authorize state low-income housing tax credits (“MO LIHTC”) in 2018 due in large part to the political position and maneuverings of former Missouri Governor Eric Greitens.  The MHDC Board is composed of the Governor, Lt. Governor, Treasurer, Attorney General, and six commissioners appointed by the Governor.  For much of 2018 the MHDC Board lacked a quorum which led to the delay in issuing a Qualified Allocation Plan (“QAP”).  While current Missouri Governor Mike Parsons voted against not allocating MO LIHTC in 2018 he also acknowledged a position supporting reforms and has been consistent on that message though specifics have not been publicly provided.

Protect Your Company Against W-2 Business Email Compromise Attacks During Tax Season

The most likely “cyber attack” that your company will face will come in the form of an email. One of the most common forms of email attack is the business email compromise (BEC) and the most popular time of the year for the W-2 version of BEC is right now — tax season.

Cyber Incident Response Checklist

“Firms must adopt written policies to protect their clients’ private information . . . they need to anticipate potential cybersecurity events and have clear procedures in place rather than waiting to react once a breach occurs.”
– S.E.C. v. R.T. Jones Capital Equities Mgt.

A Phase I ESA Gone Awry Leads to Millions in Cleanup Liabilities — a Cautionary Tale for Property Transactions

Lenders, borrowers, purchasers, sellers, and even contractors sometimes get annoyed with environmental lawyers when we insist on reviewing Phase I Environmental Site Assessment (ESA) draft reports, looking at the underlying regulatory files, checking title reports, real property records, and contract terms, counting days to make sure that the Phase I report is not stale or expired at closing, and documenting which parties do, should, or do not have reliance rights under that report.   

Colorado lawsuit claims “forced pooling” in oil and gas development is unconstitutional. Is this the next step to try to ban the industry?

On January 23, 2019, Wildgrass Oil and Gas Committee (reportedly an anti-fracking group but also an organization that includes mineral owners in the Wildgrass subdivision in Broomfield, Colorado), filed suit in federal court in Denver challenging, on federal constitutional grounds, that portion of the Colorado Oil and Gas Conservation Act (C.R.S. 34-60-116) (the “Act”) that allows the Commission to “force pool” the development of oil and gas resources.

2017 Tax Cuts and Jobs Act Breathes New Life Into Old Trick For Dealing With Participant Loans in Corporate Transactions

One of the more difficult issues in corporate transactions that are structured as asset purchases is how to deal with outstanding participant loans.  In the typical asset purchase scenario – where the purchaser does not assume sponsorship of, or accept a transfer of assets from, the seller’s retirement plan – employees of the seller who become employed by the asset purchaser generally incur a termination of employment with the seller, and therefore a distributable event under the seller’s 401(k) plan.  If a participant has an outstanding loan at the time of the asset sale, then unless the distribution is paid in a direct rollover to another employer plan that is willing to accept a rollover of a participant loan, the participant must either (i) pay off the loan before taking the distribution, or (ii) incur a potentially taxable “plan-loan offset” (where the participant’s account balance is reduced, or offset, by the outstanding loan balance).

Monitoring the Deregulatory Track Record of the Trump Administration

There are several online resources available to track the regulatory activities of the current federal administration, including various federal government agency websites.  The two sites which I and others often turn to for comprehensive and easy-to-use online access for tracking the current state of federal deregulatory efforts are the sites produced and maintained by the law schools at Harvard College and New York University.

FAA Not Applicable to Contracts with Transportation Workers, Even If They Are Independent Contractors

In New Prime, Inc. v. Oliveira, the United States Supreme Court held that the Federal Arbitration Act (“FAA”) does not apply to contracts with independent contractors in the transportation industry. This decision is very important for transportation companies because, to the extent a contract with any transportation worker contains a mandatory arbitration provision, the arbitration provision is not covered by, and is no longer enforceable under, the FAA.

EDPB Guidance on GDPR’s Jurisdictional Scope

For many U.S. organizations, figuring out whether – and to what extent – Europe’s General Data Protection Regulation (“GDPR”) applies to your operations has caused a lot of headaches. Do you have an “establishment in the [European] Union”? Are you “offering…goods and services…to…data subjects in the Union”? Are you “monitoring” the behavior of data subjects in the Union? How will these terms be interpreted and enforced?

Why Amending Your Estate Plan Could Create Significant Income Tax Savings

There are many reasons to have an attorney review your estate plan every few years.  This is especially important for couples with estate plans that included estate tax planning provisions before the federal estate tax exemption significantly increased over the last decade.  Due to the dramatic rise in the estate tax exemption, many couples who no longer face estate taxes should amend their estate plans to take advantage of future income tax savings. 

Colorado Oil and Gas Development – State Supreme Court Upholds COGCC Decision in Martinez Case

In a unanimous decision which resolved more than five years of dispute, the Colorado Supreme Court on January 14, 2019 upheld the decision of the Colorado Oil and Gas Commission (COGCC) which had refused to engage in rulemaking proposed by environmental groups. Led by the so-called teenage activist Xiuhtezcatl (pronounced Shoe-Tez-Caht) Martinez, the activists proposed a rule that would have conditioned all new oil and gas development on a finding of no cumulative adverse impacts to public health and the environment.  Responding to the rulemaking petition which was originally submitted in 2013, the COGCC said the rulemaking was beyond its statutory authority; on appeal, the district court agreed with the agency; and then the Court of Appeals, in a split decision, reversed. 

New South Carolina Insurance Data Security Act

South Carolina has recently enacted a new insurance data security law entitled the South Carolina Insurance Data Security Act. The new legislation generally applies to licensees (any person licensed, authorized to operate, or registered, or required to be licensed, authorized, or registered, under the insurance laws of South Carolina) with ten or more employees or independent contractors.

2018-2019 NCAAF Strength Coaches Salary Database

Spencer Fane LLP attorneys Bob Lattinville and Roger Denny were recently published in USA Today as instrumental contributors to the publication’s annual release of NCAAF strength coach salaries. USA Today collaborates with the Spencer Fane sports practice duo to prepare the compensation survey, which you can read here.

2018-2019 NCAAF Assistant Coaches Salary Database

Spencer Fane LLP attorneys Bob Lattinville and Roger Denny were recently published in USA Today as instrumental contributors to the publication’s annual release of NCAAF assistant coach salaries. USA Today collaborates with the Spencer Fane sports practice duo to prepare the compensation survey, which you can read here.

Cyber Resolutions for the New Year

As we enter 2019, social media is flooded with resolutions for self-improvement, let us propose a few:

New Year, New Minimum Wage

As of January 1, 2019, the minimum wage increased in over 20 states. Employers with workers in Arizona, Colorado, and Florida should note the following rates that are effective January 1:

Arizona – $11.00
Colorado – $11.10
Florida – $8.46

Missouri Minimum Wage Set to Increase Starting January 1, 2019

On November 6, 2018, Missouri voters overwhelmingly voted in favor of amending the Missouri Minimum Wage Law (“MMWL”) to increase the state-wide minimum wage. Therefore, effective January 1, 2019, the Missouri minimum wage rate will increase to $8.60 per hour and will keep increasing each successive year until 2023 when the increases will stop at the target minimum wage rate of $12.00 per hour. Employers must begin the process of budgeting for and implementing these changes ahead of the effective date of the first increase. Employers should also be aware of the non-wage-rate related changes that the law implements. However, the wage increases do not apply to “public employers.”

Missouri’s Medical Marijuana Amendment Creates New Issues for Missouri Employers

On November 6, 2018, Missouri’s voters approved a medical marijuana ballot initiative, Amendment 2, while rejecting two competing medical marijuana initiatives on the ballot.  This constitutional amendment empowers doctors to authorize patients to buy medical marijuana for the treatment of a variety of conditions. It likewise provides that dispensaries may sell marijuana for medicinal purposes.  Amendment 2 does not cover recreational use of marijuana, which is currently allowed in nine states.  Missouri is the 31st state to legalize medical marijuana. While Amendment 2 authorizes use of marijuana for medicinal purposes, this is not a “free pass” for employees.  Amendment 2 does not allow employees to use marijuana while working, on the employer’s premises, or to work while impaired by marijuana use that occurred prior to the employee’s work shift.  With that said, the passage of Amendment 2 will likely create multiple issues of varying complexity for Missouri’s employers for years to come, including:

IRS (Finally) Answers Questions re: 2019 Hardship Distributions

On November 9, 2018, the IRS issued proposed amendments to the regulations under Code Section 401(k) that describe the circumstances under which participants may take an in-service distribution of elective deferrals (and contributions subject to similar withdrawal restrictions, such as QMACs, QNECs and safe-harbor contributions) on account of financial hardship. The proposed amendments to the regulations reflect several statutory changes to 401(k) plans since the Pension Protection Act of 2006, including the recent changes (that are scheduled to apply to hardship distributions in plan years beginning after December 31, 2018) under the Bipartisan Budget Act (“BBA”) of 2018. Most importantly, the amendments answer several questions that plan sponsors and plan administrators have had with respect to both the BBA and the Tax Cuts and Jobs Act (“TCJA”) of 2017, and provide some much-needed transition relief for hardship distributions made in 2019.

Mount Lemmon Fire Dist. v. Guido: The ADEA Applies To All State and Local Government Employers

On November 6, 2018, the United States Supreme Court unanimously held (8-0) that the Age Discrimination in Employment Act (“ADEA”) extends to all small state and local government employers, not only public entities with twenty or more employees.  

Missouri Legalizes Medical Marijuana – Implications for Banks

On November 6, 2018, Missourians voted to amend the Missouri constitution to allow the use of marijuana for medical purposes. Amendment 2 allows the use of marijuana for ten medical conditions and imposes a four percent tax on the retail sale of marijuana, with the funds to be used for the health care needs of military veterans. Missouri joins over 30 other states in legalizing marijuana in some form. Despite Missouri’s and other states’ laws, the manufacture, distribution, and dispensing of marijuana remains illegal at the federal level under the Controlled Substances Act. Banks and other financial institutions must navigate this conflict between state and federal law with limited guidance from regulators.

Notice – Colorado Changes to Data Privacy Laws

Three major changes to Colorado data privacy laws became effective September 1, 2018.  These affect virtually all business collecting personally identifying information (PII)[1] from Colorado residents:

OSHA Announces Site-Specific Targeting Program to Focus Inspection Priorities at Establishments with High Injury and Illness Rates

Beginning October 16, 2018, employers with high injury and illness rates can expect more frequent OSHA inspections in connection with the resurrection of the agency’s Site-Specific Targeting (SST) Program.  OSHA will use the SST Program to prioritize employer facilities and establishments for health and safety inspections in the coming year.

2019 Inflation Adjustments

Following announcements by both the Internal Revenue Service and the Social Security Administration, we know most of the dollar amounts that employers will need to administer their benefit plans for 2019. The key dollar amounts for retirement plans and individual retirement accounts (“IRAs”) are shown on the front side of our 2019 limits card.

The reverse side of the card shows a number of dollar amounts that employers will need to know in order to administer health flexible spending accounts (“FSAs”), health savings accounts (“HSAs”), and high-deductible health plans (“HDHPs”), as well as health plans that are not grandfathered under the Affordable Care Act.

A laminated version of the 2019 limits card is available upon request. To obtain one or more copies, please contact any member of our Employee Benefits Group. You also can contact the Spencer Fane Marketing Department at 816-474-8100 or marketing@spencerfane.com.

Updated Tools for Your HIPAA Toolkit: Medical Record Fees

A Missouri federal court granted a motion to dismiss this week in a case against a provider and medical record processing company.  In the case, a patient alleged that a “search and retrieval” fee imposed in response to a patients request for access to medical records violated the Missouri Merchandizing Practices Act.  In dismissing the claim, the court only addressed Missouri law as the allegations did not involve alleged violations of HIPAA.  The outcome in this Missouri case is similar to the outcome in an unrelated  Tennessee case against the same medical records company that was dismissed earlier this summer.  The Tennessee case alleged multiple violations of Tennessee law relating to the fees imposed for access to medical records, using HIPAA as the standard for medical records fees.  In dismissing the case, the Tennessee court found that neither HIPAA nor Tennessee law provide a private cause of action for excessive medical record fees.  The Tennessee case is pending appeal.

Corporate Entity Formation Is Not Dispositive on “Employee” Status Under the FLSA

The Tenth Circuit Court of Appeals recently provided an important reminder to employers about the pitfalls that can occur when attempting to determine whether workers are employees or independent contractors. The court held that individual workers who personally perform janitorial cleaning services could be found to be employees under the Fair Labor Standards Act (“FLSA”), even if those workers have formed corporate entities and entered into franchise agreements with a franchisor See Acosta v. Jani-King of Okla., Inc., Case No. 17-6179, 2018 WL 4762748 (10th Cir. Oct. 3, 2018).  The holding in Jani-King  emphasizes the principle that forms and labels are not the deciding factor in determining whether a worker is considered an “employee” for FLSA purposes. Under current law, administrative agencies and/or the courts will make a determination as to “employee” status under the FLSA by examining the totality of the circumstances in light of the factors stated in the “economic realities test.”

Updated Tools for Your HIPAA Toolkit: Security Risk Assessment

In the wake of the record setting $16 Million dollar settlement and resolution agreement with Anthem, Inc, the Office for Civil Rights (OCR) and Office of the National Coordinator for Health Information Technology (ONC) released a new version of their Security Risk Assessment tool.  The new tool and recent settlement agreement renew the emphasis of OCR on the performance of HIPAA Security Risk Assessments by covered entities and their business associates.  

2018 NCAAF Coaches Salary Database

Spencer Fane LLP attorneys Bob Lattinville and Roger Denny were recently published in USA Today as instrumental contributors to the publication’s annual release of NCAAF coach salaries. USA Today collaborates with the Spencer Fane sports practice duo to prepare the compensation survey, which you can read here.

Innovations in Arizona’s New LLC Law

After a long 25-year tenure, Arizona’s Limited Liability Company Act will be retiring soon, to be updated by a comprehensive new law, signed by Governor Ducey this last legislative session. I had the distinct pleasure of working alongside a small group of Arizona business lawyers over the past handful of years in drafting the new LLC law.

New EPA Guidance Proposed on Clean Air Act Single Source Determinations – Industrial Air Emission Sources May Benefit

On September 5, 2018, EPA issued a draft guidance document announcing a shift of the term “adjacent” in the context of the Clean Air Act’s New Source Review (NSR) and title V operating permit programs which may benefit industrial air sources. This interpretation would focus EPA’s attention on physical proximity of facilities when making source determinations, rejecting EPA’s past practice of considering “functional interrelatedness.”

Fair Credit Reporting Act – New Summary of Consumer Rights Forms Now Required

All entities and individuals required to provide “consumers” with a notice of rights pursuant to Fair Credit Reporting Act (“FCRA”) section 609 are now required to use the updated summary of rights forms authored by the Consumer Financial Protection Bureau (“CFPB”). See Interim Final Rule (83 FR 47027). Companies that use background check reports for employment purposes are subject to this rule.

New Wage and Hour Opinion Letters Provide Guidance to Employers

On August 28, 2018, the U.S. Department of Labor, Wage and Hour Division issued six new Opinion letters. Four of these opinion letters relate to the Fair Labor Standards Act (“FLSA”), and two of the letters involve the Family and Medical Leave Act (“FMLA”). As we noted in April (WHD Opinion Letters), Secretary of Labor Alex Acosta announced in 2017 that the agency would soon re-start the practice of issuing opinion letters, which the Obama Administration had discontinued. The new opinion letters are summarized below.

IRS Updates Required Tax Notice to Address Plan Loan Offsets and Other Law Changes

The IRS has updated the model notice (sometimes referred to as the “402(f) Notice” or “Special Tax Notice”) that is required to be provided to participants before they receive an “eligible rollover distribution” from a qualified 401(a) plan, a 403(b) tax-sheltered annuity, or a governmental 457(b) plan.  Notice 2018-74, which was published on September 18, 2018, modifies the prior safe-harbor explanations (model notices) that were published in 2014. Like the 2014 guidance, the 2018 Notice includes two separate “model” notices that are deemed to satisfy the requirements of Code Section 402(f):  one for distributions that are not from a designated Roth account, and one for distributions from a designated Roth account. The 2018 Notice also includes an appendix that can be used to modify (rather than replace) existing safe-harbor 402(f) notices. 

Changes to Missouri’s Public Sector Labor Law Impacts Employers, Unions, and Employees

A new law, making it easier for Missouri public employees to opt out of both union membership and paycheck deductions funding political advocacy work, goes into effect on August 28, 2018. The new law, a victory for public sector employers, effectively enacts “right-to-work” protections for public sector employers, despite the fact that voters rejected right-to-work generally for the state of Missouri (see Missouri Right to Work is Overwhelmingly Rejected by Voters, Spencer Fane HR Solutions August 15, 2018). Therefore, public sector employers should review the new law and determine what steps need to be taken in order to comply with it upon the forthcoming effective date. (See Full Text of Law Here).

Another court rules that contractual consent to be called using an ATDS cannot be unilaterally revoked

The Telephone Consumer Protection Act,  47 U.S.C. § 227 (TCPA),  makes it unlawful for any person, absent the “prior express consent of the called party,” to make non-emergency calls using any Automated Telephone Dialing System (ATDS) to any telephone number assigned to a cellular telephone service. Anyone who violates the TCPA may be liable for “actual monetary loss” or $500 in damages for each violation, whichever is greater.

Air Quality – Colorado to Join 13 States That Have Adopted California’s LEV Requirements

On August 16, the Colorado Air Quality Control Commission set a hearing to consider establishing a new Regulation Number 20 to adopt specific provisions of the California low emission vehicle (LEV) rule for model year 2022 and newer light and medium duty vehicles. The Division’s proposed rule will not include a Zero Emissions Vehicle (ZEV) mandate and has no impact on heavy-duty vehicles or non-road (construction and agricultural) equipment.

Missouri Right to Work is Overwhelmingly Rejected by Voters

By a greater than two to one margin, Missouri voters rejected the Right to Work Act passed early in the legislative session.  The law was supported and signed by former Missouri Governor Greitens.  With strong local and national union backing and a ton of dollars, the unions led the effort first to get the issue on the ballot with more than 300,000 petition signatures and then to defeat the measure soundly at the polls. 

Phase I Environmental Site Assessments: What You Need to Know to Close Your Deal

As someone who frequently helps businesses buy and sell commercial and industrial properties, I frequently encounter misunderstandings about Phase I Environmental Site Assessments (ESAs) and their role in a property transaction. Although not an exhaustive list, these 10 items are among the most important you should know about for your next property transaction.

Oil and Gas Development Would Be Blocked on 85% of Non-Federal Land in Colorado

A recent analysis by the Colorado Oil and Gas Conservation Commission (“COGCC”) shows that increasing the current regulatory setback of 500 feet to the 2500-foot setback proposed in Initiative # 97 would prevent oil and gas development on 85% of the non-federal land surface in the state. 

Upcoming Proposition 65 Changes May Catch Companies Without Warning

All companies in supply chains for products sold in California need to be aware of the law known as California’s Proposition 65. This is especially true because significant changes to Proposition 65 requirements go into effect on August 30, 2018, increasing potential liability.

Colorado Orders Safety Fixes at Orphaned Oil and Gas Wells

On Wednesday, July 18, 2018, Governor Hickenlooper of Colorado issued an Executive Order directing the Colorado Oil and Gas Commission (COGCC) to act to “plug, remediate, and reclaim” orphaned oil and gas wells and sites.  Of the over 50,000 oil and gas wells in the state, the COGCC is currently tracking 262 orphaned wells and 373 associated well sites that require remediation and reclamation. 

DOL Rescinds Persuader Rule

On July 17, 2018, the Department of Labor (“DOL”) officially abandoned the “Persuader Rule” by filing a notice of rescission in the Federal Register. The rescission is expected to become effective on or about August 17, 2018 (i.e. 30 days after the rescission notice is published in the Federal Register). This rescission gives employers and certain legal service providers more certainty as to whether their business dealings are subject to the reporting requirements of the Labor Management Reporting and Disclosure Act (“LMRDA”).

The Data Breach Tide is Shifting Toward Proactive Security Obligations

When an organization faces a security incident, it is thrown into a complicated analysis of forty-seven state breach notification laws.  With the laws based on the residence of the affected consumer, consideration must be given to the variances in the definition of a breach that triggers notification; the content, timing, and manner of notification; additional regulatory, credit agency, or media communications; and potential litigation or enforcement.  Thus, the states in which an organization provides goods or services and collects personal information can have a significant impact on obligations following a security incident.

U.S. Will Produce More Crude Oil Than Any Other Country in 2019, According to EIA

The U.S. is projected to produce more crude oil than any other nation, including Saudi Arabia and Russia.  The July 10, 2018 forecast from the U.S. Energy Information Administration (EIA) predicts that, in 2019, U.S. crude oil production will grow to 11.8 million barrels a day.

New Colorado Consumer Data Privacy Law Impacts Governmental Entities

On May 29, 2018, Colorado Governor John Hickenlooper signed House Bill 18-1128 (the “Consumer Privacy Law”) which expanded protections of consumer data and placed additional requirements on covered and governmental entities that maintain, own, or license personal identifiable information.  The Consumer Privacy Law’s new requirements will take effect on September 1, 2018.

The Consumer Privacy Law has unique requirements for covered entities and governmental entities.  A general discussion of how the law impacts governmental entities follows.

Janus v. AFSCME – Mandatory Agency Fees Unconstitutional for Public Sector Unions

On June 27, 2018, the Supreme Court of the United States issued what may be one of its most impactful decisions of the 2017/2018 term in Janus v. American Federation of State County and Municipal Employees, Council 31, Case No. 16–1466.  In its opinion, found here, the Court held that laws requiring public sector workers who are not union members to pay union dues would be compelled speech in violation of the First Amendment. This decision reverses nearly forty years of federal precedent, and declares unconstitutional a host of state laws which allow such fee arrangements. It also has significant implications for the manner in which public sector unions collect their dues.

Cyber Liability Insurance for Employee Benefit Plans: Hackers and Malware and Phishing – Oh My!

Cyberattacks have managed to invade all walks of life, and employee benefit plans are no exception.  When a plan is attacked, the fallout can be overwhelmingly expensive and burdensome to correct.  Many plan sponsors are purchasing cyber liability insurance coverage to supplement their data security measures.  Understanding those policies – and their exclusions – is important for sponsors who are exploring such coverage.

Federal Court Halts EPA’s Waters of the United States (WOTUS) Rule in 11 States

On June 11, 2018, the U.S. District Court of the Southern District of Georgia issued a preliminary injunction preventing implementation of the U.S. Environmental Protection Agency’s 2015 Waters of the United States (WOTUS) rule in 11 states including Georgia, Alabama, Florida, Indiana, Kansas, Kentucky, North Carolina, South Carolina, Utah, West Virginia and Wisconsin.  The court held that if the WOTUS rule became effective the states would suffer irreparable harm in both a “loss of sovereignty and unrecoverable monetary losses.” 

The Masterpiece Cakeshop Decision – Bakery Owner Wins, But on Narrow Grounds

On June 4, 2018, the Supreme Court of the United States issued its highly anticipated decision in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, Case No. 16-111. In its opinion, found here, the Court vacated an administrative order entered by the Colorado Civil Rights Commission (“CCRC” or the “Commission”) against the bakery, which had refused to sell custom wedding cakes to same-sex couples on the grounds that doing so would violate the owner’s sincerely held religious beliefs. The Court made it clear that judges and administrative officials violate a litigant’s constitutional rights if they engage in conduct that displays hostility toward a particular set of religious beliefs. But the majority opinion left many questions unanswered. It remains to be seen if a business owner may refuse to do business with a prospective customer because of the customer’s sexual orientation when the refusal is based on a sincerely held religious belief.

The Responsibility of Regulation Relief Within the Economic Growth, Regulatory Relief and Consumer Protection Act

Matt outlines the potential risks and benefits of the Economic Growth, Regulatory Relief and Consumer Protection Act., which was introduced by a bi-partisan group of 23 senators with the primary intent of reducing regulatory burdens for smaller financial institutions. Published in The Show-Me Banker and In Touch.

“As Is” Clause Held to Preclude Claim Arising From Seller’s Oral Representations That Damaged Parts on an Aircraft Were Repairable

The significance of “as is” language in an aircraft sales agreement is demonstrated again in a recent decision of the Federal District Court for the Northern District of Texas.  In Red River Aircraft Leasing, LLC v. JetBrokers, Inc., the aircraft buyer had learned of hail damage to an aircraft during the course of negotiations, but was assured by the seller that the damaged parts were repairable.  Of course, after taking possession of the aircraft, the buyer learned that the parts in question were not repairable, and proceeded to sue the seller on a theory of negligent misspresentation.  The Federal Court, however, ruled that because the buyer had accepted the aircraft “as is” and “with all faults” in its purchase agreement, it would be unable to establish that it relied on the seller’s statement in buying the aircraft.  The court therefore entered a summary judgment for the seller, leaving the buyer without a remedy.

Insurance Benefits – Unreasonable Delay and Denial. Supreme Court of Colorado Decides Three Cases Against Insurance Companies.

In a trio of case opinions issued on May 29, 2018, – all written by Chief Justice Nancy Rice who will retire in June – the Colorado Supreme Court ruled against the arguments of insurance companies. 

A “Top-Hat” Plan Primer

Federal Appellate Court Decision Highlights Importance of “Firestone” Language

In a recent decision, the Sixth U.S. Circuit Court of Appeals resolved an important question in a way that should put administrators of ERISA plans in a far stronger position vis-à-vis claimants who disagree with the administrators’ plan interpretations.  Essentially, the court in Clemons v. Norton Healthcare Retirement Plan held that the contract-interpretation doctrine of “contra proferentum” has no application once a court has determined that a plan document grants the administrator the type of broad discretion approved by the U.S. Supreme Court in its 1989 Firestone decision.

Employee Class Action Waivers Held Enforceable

On May 21st, the United States Supreme Court held that the National Labor Relations Act (“NLRA”) does not prohibit employers from requiring workers to agree, as a term and condition of their employment, that they waive the right to bring class or collective actions, and will individually arbitrate employment-related legal claims.  Epic Sys. Corp. v. Lewis, U.S., Case No. 16-285 (Slip Opinion, May 21, 2018). This decision resolves a high profile conflict, in which the National Labor Relations Board and some federal courts had found that the NLRA prohibits enforcement of arbitration agreements containing class action waivers. The Court’s decision makes clear that the NLRA does not prevent the enforcement of an arbitration agreement that is otherwise valid under the Federal Arbitration Act (“FAA”). 

Health Plans’ Anti-Assignment Clauses Upheld by Two More Federal Appellate Courts

Over the past two months, the United States Court of Appeals for both the Ninth Circuit and the Third Circuit have upheld “anti-assignment” clauses in ERISA-governed health plan documents.  These holdings – which adopt the same position previously taken by the First, Second, Fifth, Tenth, and Eleventh circuits – are a blow to healthcare providers that attempt to bring suits against employer-sponsored health plans (or the insurance companies funding benefits under those plans) as “assignees” of individual plan participants. 

NLRB Restored to Employer-Friendly Three Republican/ Two Democrat Composition

Relief for employers under the Trump Administration continues, following the U.S. Senate’s narrow confirmation of John Ring, former Morgan Lewis & Bockius LLP attorney, to the National Labor Relations Board on April 11, 2018.  The 50-48 Senate vote returned the five-member board to an employer-friendly composition of three Republicans and two Democrats and alleviates the log jam of the 2-2 split created when Board Member Phillip Miscimarra stepped down. On April 13, Ring became Chair of the Board, replacing Marvin Kaplan as Chair. Kaplan remains a member of the Board. 

Loosened Maximum Distance Requirements for APRNs in Missouri

Effective Thursday, April 26, the Missouri Board of Registration for the Healing Arts (MBHA) and the Missouri Board of Nursing (MBN) loosened the regulatory requirements which dictate the maximum distance between the location at which an Advance Practice Registered Nurse (APRN) practices and the location at which his/her collaborating physician practices.

U.S. Supreme Court Rules That Inter Partes Review Challenges On Patent Validity Before the U.S. Patent and Trademark Office Are Constitutional

Your business may at some point find itself in the unfortunate position of facing an allegation that it is infringing another’s patent.  The situation can be even more aggravating if you believe that the subject patent is obvious or not novel and therefore wrongfully issued.  You can defend against an allegation of patent infringement by challenging the validity of the patent in a civil suit before a court of law.  A patent carries a presumption of validity, which can only be overcome by clear and convincing evidence.  That places a high burden on you to invalidate the patent in the lawsuit.

2017-18 Autonomy 5 Athletics Directors’ Compensation Survey

We reviewed all forms of compensation for the athletics directors at member institutions in the Autonomy 5 Conferences. We analyzed these employment agreements and related documents (the, “Contracts”), which were obtained in partnership with USAToday, and created a sortable database of primary compensation (click here to view the FBS Athletic Director Database, the “Database”).

The SEC’s Fiduciary Proposal – Form CRS

On April 18, the Securities and Exchange Commission issued a proposal package that includes two new rules and one interpretative release.  The package consists of three components – Regulation Best Interest, Investment Adviser Standard of Conduct Interpretation, and Form CRS – Relationship Summary.   According to the SEC, the proposal is intended to balance investor protections and regulatory requirements with investor access and choice.  Each component of the proposal is available for public comment for 90 days after publication in the Federal Register.

In a series of three articles, Spencer Fane LLP describes the SEC’s proposal and potential impacts on broker-dealers and investment advisers.  This third article describes the Form CRS – Relationship Summary portion of the SEC’s fiduciary proposal.

The SEC’s Fiduciary Proposal – Investment Adviser Standard of Conduct

The Securities and Exchange Commission voted on April 18 to issue a proposal package that includes two new rules and one interpretative release.  According to the SEC, each component of the proposal – Regulation Best Interest, Investment Adviser Standard of Conduct Interpretation, and Form CRS – Relationship Summary – is intended to enhance investor protections and regulatory clarity while maintaining investor access and choice.  Each part of the SEC’s proposal is available for public comment for 90 days after publication in the Federal Register.

In a series of three articles, Spencer Fane LLP describes the SEC’s proposal and potential impacts to broker-dealers and investment advisers.  This second article describes the Investment Adviser Standard of Conduct Interpretation.

City of Springfield Receives Approval to Designate 3 Areas as “Qualified Opportunity Zones”

Missouri Governor Eric Greitens and U.S. Senator Roy Blunt (R-MO) recently announced the selection of 161 census tracts receiving designation as “qualified opportunity zones,” including ten census tracts located in the City of Springfield[1]. The ten census tracts receiving designation in Springfield are concentrated in three distinct areas of the city: center city, north Springfield, and a portion of central Springfield.  The qualified opportunity zones program was adopted as part of the recent tax reform legislation and is designed to spur economic and infrastructure growth in areas with high poverty and low job growth.

The SEC’s Fiduciary Proposal – Regulation Best Interest

In an open meeting on April 18, the Securities and Exchange Commission voted four to one to issue two new rules and one interpretative release that are intended to provide investor protections and regulatory clarity, as well as investor access and choice.  Specifically, the SEC issued Regulation Best Interest, Investment Adviser Standard of Conduct Interpretation, and Form CRS – Relationship Summary.  Each component of the SEC’s proposal is available for public comment for 90 days after publication in the Federal Register.  In a series of three articles, Spencer Fane LLP describes the SEC’s proposal and potential impacts on broker-dealers and investment advisers.  This first article describes the Regulation Best Interest portion of the SEC’s fiduciary proposal.

Intermediate Sanctions Tax: For Athletics Directors It’s Personal

The recent enactment of the Tax Cuts and Jobs Act has drawn attention from all corners of the intercollegiate athletics industry. 

Ramifications for Missouri Physicians of Enhanced Mo HealthNet OPI Program

Effective March 1, 2018, the Missouri Department of Social Services (“MDSS”) – Mo HealthNet Division (“Mo HealthNet”) began working collaboratively with the Missouri Department of Mental Health and the Missouri Department of Health and Senior Services to enhance the Mo HealthNet Opioid Prescription Intervention (“OPI”) Program. 

New WHD Opinion Letters Provide Guidance to Employers

Last week, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued three new opinion letters for the first time since 2010.  The Obama administration had ceased the practice of issuing opinion letters – which answer specific questions from employers or other parties – in favor of general administrative interpretations.  Last June, Secretary of Labor Alex Acosta announced that he was reinstating the practice of issuing opinion letters for the Trump administration.  This announcement was praised by businesses and employment lawyers because the opinion letters apply the law to a specific set of facts and represent official statements of agency policy.  In addition to the new letters, WHD republished 17 letters the Obama administration rescinded following their original publication late in the Bush administration.

Equal Pay Act: Ninth Circuit Says Prior Salary Not Job-Related

On April 9, the full Ninth Circuit held that employers may not rely on an employee’s prior salary as a “factor other than sex” in defending against a claim under the Equal Pay Act. Rizo v. Yovino, No. 16-15372 (9th Cir. April 9, 2018) (found here). In making this determination, the court phrased the question before it concisely, asking “can an employer justify a wage differential between male and female employees by relying on prior salary?” The answer: a resounding “no.” The court further stated that the “text, history and purpose of the Equal Pay Act” do not allow an employer to rely on an employee’s prior salary to justify a wage disparity. Id. 

Air Emissions From Oil and Gas Wells Health Risks Analyzed – More Study Needed

About the only thing that stakeholders agree on is that the risk assessment saga in Colorado means one thing – more study is needed. On March 27, 2018, the latest in a series of health risk studies was published by the Colorado School of Public Health at the University of Colorado Medical Campus. Using air emissions data taken from within the 500 foot regulatory setback requirement for homes near wells, the study concludes that people living in close proximity to oil and gas wells are subject to an increased risk of developing cancer.

The Superfund Petroleum Exclusion – Alive and Well in the Ninth Circuit

In an unpublished opinion on March 21, 2018, the Ninth Circuit Court of Appeals affirmed the trial court’s dismissal of a lawsuit citing the application of CERCLA’s petroleum exclusion. The Court held that the site investigation at a former gas station did NOT identify anything other than petroleum or fractions thereof. Consequently, the Plaintiff did not plausibly allege any CERCLA “hazardous substances” were present at the site. The case was dismissed.

Congress Enacts Redevelopment-Friendly Changes to the Superfund Law, and Tenants and State and Local Governments Gain Clarity on How to Avoid Cleanup Liability

On March 23, 2018, the President signed into law the BUILD Act of 2018, which significantly clarifies the potential scope of cleanup liability for tenants and state and local governments under the federal Superfund law.  Now, a tenant at an industrial or manufacturing site can, under appropriate circumstances, claim the “bona fide prospective purchaser” (BFPP) defense to Superfund liability and escape what would otherwise be strict, joint, and several owner/operator liability when leasing previously-contaminated property. 

EPA Will Revise Emission Standards For Cars and Light Trucks for Model Years 2022-2025

On April 2, 2018, the EPA announced the results of its updated Midterm Evaluation (MTE) determination related to greenhouse gas (GHG) emissions standards for cars and light trucks for model years 2022-2025. The agency stated that the current standards are not appropriate, and that it will work with the National Highway Traffic Safety Administration to set a notice and comment rulemaking to set new standards.

Hazardous Waste Generators, Transporters, and TSDFs Should Plan Now for EPA’s 2018 e-Manifest System

Authorized by Congress in 2012, the EPA’s Electronic Manifest System (e-Manifest) will become effective on June 30, 2018.  When they register, generators, transporters, and receivers of hazardous wastes will be able to use this system to facilitate the electronic transmission of the uniform hazardous waste manifest form.  States must adopt the provisions of the final rule in order to enforce them under state law and to maintain manifest program consistency.

Chapter 9 – More than just Orange County and Detroit

A Chapter 9 bankruptcy offers protection to a financially-distressed municipality so that it may develop a plan for addressing its debts. A product of the Great Depression, bankruptcy protection for municipalities was first enacted in 1934.  However, the Supreme Court held the act unconstitutional as an improper interference with the sovereignty of states. See Ashton v. Cameron County Water Improvement Dist. No. 1, 298 U.S. 513 (1936). Congress subsequently passed a revised Municipal Bankruptcy Act in 1937, which was eventually upheld by the Supreme Court. See United States v. Bekins, 304 U.S. 27 (1938).

Colorado Court of Appeals Upholds Warrantless Inspections at Oil and Gas Sites

On March 22, 2018, the Colorado Court of Appeals held that the Colorado Oil and Gas Conservation Commission’s authority to undertake unannounced, warrantless inspections (i.e., administrative searches) at oil and gas sites does NOT violate the U.S. or Colorado constitutions.

Here We Go Again… Fifth Circuit Strikes Down DOL’s Fiduciary Rule

In a significant blow to the Department of Labor’s controversial regulation re-defining what constitutes an investment-advice fiduciary, a split three-judge panel of the Fifth Circuit Court of Appeals ruled on March 15 that the DOL exceeded its authority when creating the rule.  The 2-1 decision of the appellate court strikes down the regulation and its associated prohibited transaction exemptions in their entirety.  (Chamber of Commerce v. U.S. Dept. of Labor (5th Cir. March 15, 2018)).  In its wake, the court’s decision leaves even more of the confusion that has plagued the DOL’s 2016 rulemaking.

Changes to Chapter 12 Bankruptcy May Increase Farmers’ Ability to Reorganize in Bankruptcy

Farmers attempting to reorganize under Chapter 12 of the Bankruptcy Code may propose selling land as a means of generating cash to pay creditors. This sale creates a large capital gains tax, as the cost basis for the land is likely low. That capital gains tax has priority over general unsecured creditors, and the farmer needs to pay that capital gains tax in full to get a Chapter 12 plan confirmed.

DOL Announces “PAID” Program

On March 6, 2018, the Wage and Hour Division of the U.S. Department of Labor (DOL) announced that it will soon launch a nationwide pilot program for employers to self-report potential overtime and minimum wage violations. The pilot program is called the Payroll Audit Independent Determination (PAID) program. The primary objective of PAID, according to the agency, is to “improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed—faster.” Many details are not yet available, but the DOL has announced the broad outlines of the program, which are available here:  https://www.dol.gov/whd/paid/#1

New Chapter 14 Bankruptcy Code Recommended by the United States Treasury Department

Would Handle Liquidation of Failing Financial Firms and Limit the Use of Orderly Liquidation Funds as Established in the Dodd-Frank Act

In February 2018, the United States Treasury Department issued the Orderly Liquidation Authority and Bankruptcy Reform Report (the “Report”) advocating for the enhancement of the Bankruptcy Code, specifically as it applies to financial institutions.  This report is in stark opposition to the CHOICE Act proposed by a conservative group of lawmakers in the U.S. House of Representatives that seeks to undo much of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and fully repeal the orderly liquidation authority (“OLA”) established in Dodd-Frank.

Investment Advisers and Conflicts Of Interest

The Department of Labor and the Securities and Exchange Commission have expressed concerns regarding potential conflicts of interest that investment advisers do not explicitly disclosed.  Thus, plan fiduciaries may not be aware of such conflicts when they engage and monitor their plan’s investment consultant.  These concerns were recently highlighted when the SEC launched an initiative in connection with investment advisers’ selection or recommendation of a higher-cost mutual fund share class for their clients when a lower-cost share class of the same fund is available.  The SEC’s initiative reminds plan fiduciaries of the importance of obtaining appropriate information to fulfill their fiduciary obligations when engaging and monitoring investment advisers.

Colorado Legislation Could Halt Oil and Gas Production

House Bill 1071, if enacted as written, will obviate the need for the Colorado Supreme Court to resolve the dilemma caused by the Colorado Court of Appeals opinion in the Martinez case.   As described in earlier Spencer Fane posts, that appellate decision effectively elevated the protection of public health and the environment over the interests of mineral rights owners and developers.  The issue before the Colorado Supreme Court is whether the current statute dictates that the Colorado Oil & Gas Conservation Commission (COGCC) implement a statutorily directed balancing act without giving priority to any particular interest.

Supreme Court Adopts Restrictive Minority View of Section 546(e) Safe Harbor Regarding Certain Securities Payments

On February 27, 2018, a unanimous Supreme Court held in Merit Management Group, LP v. FTI Consulting, Inc. (link here) that an otherwise-avoidable transfer is not subject to the safe harbor in Section 546(e) (which provides, in relevant part, a trustee may not avoid a transfer that is a “settlement payment . . . made by or to (or for the benefit of) a . . . financial institution” or that “is a transfer made by or to (or for the benefit of) a . . . financial institution . . . in connection with a securities contract”) of the Bankruptcy Code merely because funds flow through covered financial entities.  Rather, the availability of the Section 546(e) safe harbor depends on the particular transfer sought to be avoided.

SEC Launches Share Class Selection Disclosure Initiative

The Securities and Exchange Commission recently announced a temporary program for investment advisers who may have inadequately disclosed potential conflicts of interest related to their selection or recommendation of mutual fund share classes. Participation in the program, however, is not without its drawbacks.

Congress Eases Restrictions on Hardship Withdrawals

Buried in Sections 41113 and 41114 of the recent Bipartisan Budget Act of 2018 are provisions designed to facilitate hardship withdrawals from 401(k) and 403(b) plans.  Because these provisions take effect for plan years beginning after December 31, 2018, sponsors of these plans will want to consider whether to broaden their hardship withdrawal provisions – or even add such provisions.

Tax Cuts and Jobs Act – Modified Rules for UBTI

For many years tax exempt organizations and retirement plan trusts have been permitted to avoid tax on income generated by unrelated trades or businesses they hold by netting the gains, losses, and deductions among those trades or businesses.  The Tax Cuts and Jobs Act modifies those rules, increasing the likelihood that such entities must report, and pay tax on, UBTI.

Tougher Oil & Gas Rules in Colorado Set to Take Effect

On February 13, 2018, the Colorado Oil and Gas Conservation Commission approved new rules to require the industry to track the location of oil and gas pipelines. The new rules stem from an explosion in Firestone, Colorado caused by a leaking pipeline that destroyed a house and killed two people on April 17, 2017. That disaster triggered a massive public outcry, directives from the Governor, and now significant revisions to state regulations. 

Large Arizona Jury Award Reversed Because of Timely Raised Procedural Defense

The Arizona Court of Appeals recently reversed a jury’s award of $375,000 in damages to a former police officer for the City of Surprise. In Peterson v. City of Surprise, No. 1 CA-CV 16-0415 (Feb. 6, 2018), the court held that the employee, who claimed she was constructively discharged in retaliation for reporting sexual harassment, was precluded from bringing the case in court because she had failed to file a charge of discrimination within 180 days after she left her employment. As the court stated, the employee specifically “crafted her claim against the City to allege not constructive discharge caused by ‘firsthand’ discrimination, but constructive discharge caused by illegal retaliation under the [Arizona Employment Protection Act].” A claim of illegal retaliation is one that contends that the employer’s actions were wrongful in response to a report of discrimination, not wrongful because of the discrimination itself. The court held that there was no difference between the claim of retaliation and the harassment claims for purposes of the filing deadline.

Colorado Supreme Court Will Address Oil and Gas Development in its Review of the Martinez Case

On January 29, 2018 the Colorado Supreme Court agreed to hear the appeal of the Martinez case.  The state’s high court will decide whether, in the agency’s review of oil and gas permit applications, the Colorado Oil and Gas Conservation Commission (“COGCC”) must elevate “public health and the environment” over other factors identified in the agency’s organic statute.

City of KCMO Adopts Ban The Box Ordinance for All “Employers”

On February 2, 2018, the City of Kansas City Missouri (“KCMO” or “the City”) adopted a “Ban The Box” ordinance that applies to private employers. The KCMO “Criminal Records in Employment” ordinance enacts a new section, Section 38-104. The ordinance becomes effective on June 9, 2018.  Before this ordinance, private employers located in KCMO were encouraged, but not required, to limit the extent to which they based employment-decisions on an applicant’s criminal history. The new Section 38-104 clearly and unambiguously places limitations on the extent to which all private employers located in KCMO can take an applicant or current employee’s criminal history into account when making employment decisions. (The City has applied a similar rule to its own employment procedures since 2013.). Employers with locations in KCMO should carefully review the ordinance and seek guidance from legal counsel in determining whether, how and when to make inquiries regarding criminal history.

EPA Asks States to the Take the Lead in Environmental Enforcement

Recently, EPA issued an Interim OECA Guidance on EPA and state roles on managing enforcement and compliance assistance.  See, Interim OECA Guidance on Enhancing Regional—State Planning and Communication on Compliance Assurance Work in Authorized States. While EPA is seeking to emphasize cooperative federalism in modifying the emphasis of the 1986 revised policy on state/EPA enforcement agreements, as provided in the first footnote of the Guidance, the policy issued on January 22, 2018, appears to make the states the primary enforcer of environmental laws and provides a secondary role for EPA in that regard.

New Disability Claims and Appeals Procedures Finally Take Effect

When the Department of Labor (“DOL”) delayed by 90 days the date by which ERISA plans were required to comply with a set of disability claims and appeals regulations issued in the waning days of the Obama Administration, we predicted that a further delay – or even a complete withdrawal – of the regulations could be in the works.  As it turns out, we were wrong.  Instead, the DOL announced in early January that the regulations will become fully applicable on April 1st – and without change.

The Bankruptcy Venue Reform Act of 2018

In January 2018, Senators John Cornyn (R-TX) and Elizabeth Warren (D-MA) introduced a bill that would require corporate debtors to file for bankruptcy protection in the district in which their principal assets or principal place of business is located. In other words, the Bankruptcy Venue Reform Act of 2018 would eliminate a corporate debtor’s ability to commence a case in its state of incorporation if the state of incorporation is neither the debtor’s principal place of business nor the location of its principal assets. Moreover, the bill would do away with the so-called “Affiliate Rule” that allows corporate debtors to file in any district where an affiliate has a pending bankruptcy case. If signed into law, the act would also put an end to protracted, expensive battles over venue: judges would be required to make a decision on a venue transfer request within fourteen days of the objecting party’s request.

Tax Cuts and Jobs Act – New Rules for Retirement Plans and IRAs

Although the main feature of the Tax Cuts and Jobs Act is a significant reduction in the corporate federal income tax rate, the Act also makes a number of significant changes to the rules governing employer-sponsored retirement plans and individual retirement accounts.  From plan loans to hardship withdrawals and Roth recharacterizations, employers should make sure that they understand how these new rules might affect them.

Tax Cuts and Jobs Act – Affordable Care Act Changes

Although the recent Tax Cuts and Jobs Act eliminates the ACA individual mandate, the employer mandate, ACA benefit mandates, and ACA reporting requirements remain in effect.  Thus, employers should continue to be mindful of and comply with their obligations under the ACA.

EPA and OSHA Increase Civil Penalties

In January 2018, both EPA and OSHA increased civil penalties for new enforcement cases.  These increases are required by the Federal Civil Penalty Inflation Adjustment Act of 2015 (Inflationary Adjustment Act), which directs federal agencies to annually adjust civil penalties for inflation by January 15 of each new calendar year in order to “maintain the deterrent effect of civil penalties by translating originally enacted statutory civil penalty amounts to today’s dollars.” 83 Fed. Reg. 1190, at 1191 (January 10, 2018).

Tax Cuts and Jobs Act – New Executive Compensation Rules

This is the second in a series of articles by which the Spencer Fane LLP Employee Benefits Practice Team will explain key changes made in the employee benefits area by the Tax Cuts and Jobs Act (Public Law 115-97), which was signed into law on December 22, 2017.  In addition to establishing new rules for transportation fringe benefits (see our first article in this series), the Act makes a number of changes that may affect how employers structure their executive compensation programs.  This article describes the Act’s impact on for-profit employers, and outlines options that those employers should consider for their compensation arrangements.

Limited Liability Company Interests as Collateral: Remedies on Default

Various business formations and financial transactions utilize alternative entity forms, such as limited liability companies (“LLC”), limited partnerships, master limited partnerships, limited liability partnerships, limited liability limited partnerships—you get the idea. In turn, commercial borrowers may offer—and lenders may request—interests in such entities as collateral. This blog post focuses on LLC membership interests (“LLC Interests”) as collateral.

By The Numbers: FBS Assistant Football Coach Contracts

In partnership with USA Today we collected and analyzed employment agreements for assistant football coaches at public Football Bowl Subdivision (FBS) colleges and universities (the, “Sample Set”).

Bankruptcy Rule Changes: What You Need to Know

Nearly every year, there are changes to the Federal Rules of Bankruptcy Procedure. 2017 was no exception, and new rules went into effect on December 1, 2017. Creditors should be aware of the new timeframe for filing claims and new relief that can be sought in Chapter 12 and Chapter 13 plans. Below is a summary of some of the new rule changes.

Pass Through Deduction in New Tax Bill Unlikely to Slow Trend Toward Industry Consolidation

The Tax Cuts and Jobs Act of 2017 signed into law on December 22, 2017 by President Trump added a new deduction for noncorporate taxpayers (i.e. S corporations, partnerships, sole proprietorships, and trusts) who have qualified business income.  This deduction, found in section 199A of the Internal Revenue Code, is also referred to as the “business pass-through income deduction.” 

The FLSA & Unpaid Internship Programs: DOL Adopts “Primary Beneficiary” Test

On January 5, 2018, the U.S. Department of Labor (“DOL”) clarified its position regarding paid and unpaid internships. They will now use the “primary beneficiary” test for determining “whether interns are employees” under the Fair Labor Standards Act (“FLSA”). The agency has issued a revised Fact Sheet called “Internship Programs under the Fair Labor Standards Act.”

How The New Excise Tax Impacts Coach Compensation

Heralded by some as the most significant overhaul of the Internal Revenue Code (IRC) in decades, the bill (now awaiting the President’s signature before becoming law) formerly known as “The Tax Cuts and Jobs Act” – its title removed pursuant to a special budget rule – could significantly impact the business of college athletics.

Tax Cuts and Jobs Act – New Tax Rules For Transportation Fringe Benefits

Although the recent Tax Cuts and Jobs Act largely retains the favorable tax treatment afforded employees who receive employer-provided transportation assistance, it denies employers any tax deduction for providing these tax-favored benefits. Moreover, tax-exempt employers will now be subject to unrelated business income tax on such benefits. Because the new rules took effect as of January 1, 2018, employers currently sponsoring such programs should promptly evaluate their options.

It’s a Three-Peat: ACA-Reporting Deadline Extended Once Again

The Affordable Care Act (“ACA”) imposed reporting requirements on health coverage providers (including self-funded employer plans) and “applicable large employers” (those with 50 or more full-time employees). For health coverage provided during both 2015 and 2016, the IRS extended the deadline for issuing certain of the required reporting forms. In Notice 2018-06, the IRS has now granted a similar extension with respect to reporting health coverage provided during calendar-year 2017.

Is Fluoridated Drinking Water a Risk? A Federal Court Allows Citizen Suit to Proceed Against EPA Concerning TSCA Oversight

A citizens group cleared the first major hurdle to obtaining a declaratory judgment compelling the U.S. Environmental Protection Agency to consider whether to regulate the fluoridation of drinking water supplies under Toxic Substances Control Act (TSCA)’s Section 6(a) when a federal judge denied the EPA’s motion to dismiss the citizen group’s petition for such a declaration. Consequently, the citizen suit will proceed in evaluating whether EPA must initiate proceedings to decide if it should issue a rule under Section 6 to impose regulatory controls on fluoridation of drinking water.

IRS Issuing Employer Play-or-Pay Notices

Although the GOP tax reform bill reduces to zero the penalty for failing to comply with the Affordable Care Act’s individual coverage mandate, it does nothing to alleviate the employer ACA mandate.  Coincidentally, the IRS has just started issuing notices of potential penalty assessments under that employer mandate (commonly known as the “play-or-pay” provision).

These notices take the form of a “Letter 226J” (this notation appears in the footer of each page), and the Letter makes crystal clear the amount of the potential penalty assessment (which can be substantial).  This dollar amount appears in bold on the second line of the Letter’s text.

It’s Not Too Late to Complete OSHA Electronic Reporting

December 15, 2017, was the deadline for employers to electronically submit information from work-related injuries and illnesses under OSHA’s Electronic Reporting Rule. Nevertheless, OSHA announced on December 18, 2017, that it will continue accepting electronic submittals until midnight on December 31, 2017.

NLRB Issues Two Landmark Decisions: Return to Original Joint-Employer Standard & New Handbook Policy Review Standard

On December 14, 2017, the National Labor Relations Board (the “Board”) issued two landmark decisions. Both are of note because they directly and substantively address two issues that have vexed employers for a number of years: (1) When can two separate and distinct corporate entities be treated as joint-employers for NLRA purposes? and (2) When is a work rule or handbook policy unlawfully overbroad under the NLRA?

DOL Proposes Rescission of Regulations that Restrict Tip Pooling

On December 5th, 2017, the U.S. Department of Labor, Wage and Hour Division will publish a Notice of Proposed Rulemaking (“NPRM”) and a request for comments on tipping regulations issued pursuant to the Fair Labor Standards Act (“FLSA”). The NPRM will propose that the tip pooling regulations issued by the DOL in 2011, which placed restrictions on employers’ ability to implement tip pooling arrangements, should be rescinded.

New Age Harassment: When Will the Next Shoe Drop? What to Do When You Learn One of YOUR Employees Might Be on the Naughty List.

Who will be next? After Matt Lauer, Garrison Keiller, and Russell Simmons each faced assertions of inappropriate conduct in the last week, the “who’s next” question predominates pop culture and the daily news cycle. In the wake of numerous sexual harassment accusations unfolding across Hollywood and corporate America, sexual harassment has become one of the hottest topics in today’s news. While claims of sexual harassment in the workplace are nothing new, the almost daily media coverage of so many high-profile claims will likely result in an increase in reports of sexual harassment allegations for many employers in the immediate future.

Fiduciary Rule – Status Quo until July 1, 2019

On November 29, 2017, the Department of Labor granted an extension of the transition period for the Fiduciary Rule’s Best Interest Contact Exemption and Principal Transaction Exemption, and delayed the applicability date of the amendments to Prohibited Transaction Exemption 84-24. The new transition period will end on July 1, 2019, rather than January 1, 2018. The Department also extended the temporary enforcement policy in Field Assistance Bulletin 2017-02 to July 1, 2019. Thus, financial institutions and advisers impacted by the Fiduciary Rule and related exemptions remain subject to the same requirements as they have been since June 9, 2017, when the Fiduciary Rule and the Impartial Conduct Standards became applicable.

Deadline for OSHA Electronic Reporting Rule Delayed Until December 15, 2017

OSHA has delayed the December 1, 2017, deadline for the Electronic Reporting Rule until December 15, 2017.  This rule requires a wide range of establishments to electronically submit injury and illness information from their OSHA Forms 300A.  The deadline extension was announced via a November 24, 2017, OSHA notice in the Federal Register.

EPA and Corps of Engineers Take Another Step to Roll Back “Waters of the United States” Definition and Issue a New Proposed Rule

The United States Environmental Protection Agency and United States Army Corps of Engineers last week took another step toward rolling back their 2015 proposed definition of “waters of the United States” (WOTUS). On November 22, 2017, the agencies published in the Federal Register a new proposed regulation to delay the effective date of the 2015 WOTUS rule until two years from the date of final action on the new proposal. The agencies seek comments until December 13, 2017, on their new November 22 proposal, so stakeholders who wish to comment have limited time to do so.

Deadline for OSHA Electronic Reporting Rule Fast Approaching

Employers have until December 1, 2017, to electronically submit injury and illness information from their 2016 Summary of Work-Related Injuries and Illnesses (Form 300A) under OSHA’s 2016 Improve Tracking of Workplace Injuries and Illnesses Rule (“Electronic Reporting Rule” or “the Rule”).

Trump Administration EPA to Focus Criminal Enforcement on Significant and Egregious Violators, Citing 1994 “Devaney Memorandum”

A high-ranking Environmental Protection Agency (EPA) enforcement official in the Trump Administration recently cited a 1994 memorandum by Earl Devaney, then Director of EPA’s Office of Criminal Enforcement, as presenting guiding principles to select cases for criminal enforcement of environmental violations. The January 12, 1994, memorandum, “Exercise of Enforcement Discretion,” is often referred to as the “Devaney Memorandum,” and it is available at this link:  https://www.epa.gov/sites/production/files/documents/exercise.pdf. This may signal that criminal enforcement of environmental laws under the Trump Administration will be limited to situations in which there has been significant actual or threatened environmental harm and truly culpable conduct.

Major Department Chain’s Improper Disposal of Household Goods and Consumer Products Results in Significant RCRA Penalty from EPA

On October 25, 2017, the EPA announced that it had reached a settlement with Macy’s Retail Holding, Inc. (Macy’s) in connection with alleged violations of RCRA associated with retail goods and items that were improperly disposed of at department store locations. Under the settlement with EPA, Macy’s agrees to correct the violations, develop a training program for its retailers, conduct third-party audits of eleven of its largest facilities, pay $375,000 in civil penalties, and comply with other requirements within one year.

GOP Tax Bill Contains Benefits Surprises

Despite rumors to the contrary, the tax bill introduced into the House of Representatives by the Republican Party leadership would do nothing to restrict employees’ ability to make pre-tax deferrals to 401(k), 403(b), or 457(b) plans. Trial balloons had suggested that pre-tax deferrals might be limited to only half of the overall annual deferral limit (or even less), with any remaining deferrals made only on a “Roth” (after-tax) basis. But at least for now, “Rothification” appears to be dead.

What the House bill would do, however, is perhaps even more surprising. A slew of tax-favored fringe benefits would be eliminated. And nonqualified deferred compensation as we now know it would be entirely transformed. Incredibly enough, most of these changes would take effect as of January 1, 2018 – less than two months after the bill’s introduction.

EPA Administrator Directs EPA to Cease its “Sue and Settle” Practice

On October 16, 2017, EPA Administrator Pruitt issued a directive, requiring EPA to immediately cease a practice known as “sue and settle,” in response to concerns that EPA has lately been defending against suits brought by environmental organizations with insufficient vigor.  The “sue and settle” concept is not defined in relation to a specific political party or view of environmental protection.  Rather, it is the concept that political parties in power sometimes half-heartedly defend against lawsuits, when the relief sought by such suits is actually favored by the party in power.

2018 Inflation Adjustments

Following announcements by both the Internal Revenue Service and the Social Security Administration, we know most of the dollar amounts that employers will need to administer their benefit plans for 2018. The key dollar amounts for retirement plans and individual retirement accounts (“IRAs”) are shown on the front side of our 2018 limits card.

The reverse side of the card shows a number of dollar amounts that employers will need to know in order to administer health flexible spending accounts (“FSAs”), health savings accounts (“HSAs”), and high-deductible health plans (“HDHPs”), as well as health plans that are not grandfathered under the Affordable Care Act.

A laminated version of the 2018 limits card is available upon request. To obtain one or more copies, please contact any member of our Employee Benefits Group. You also can contact the Spencer Fane Marketing Department at 816.474.8100 or marketing@spencerfane.com.

Administration Proposes Delay of Disability Claims and Appeals Procedures

The Department of Labor has proposed a 90-day delay in the applicability of disability claims and appeals regulations that were finalized in the waning days of the Obama Administration. Rather than applying to claims filed on or after January 1, 2018, the regulations would now apply to claims filed on or after April 1, 2018. Moreover, it seems likely that a further delay – or even a complete withdrawal – of the regulations could be in the works.

Bifurcated Distribution Options Made Easier

Earlier this year, the IRS issued Notice 2017-44. This Notice provides model amendments that plan sponsors may use to amend qualified defined benefit plans to offer a bifurcated distribution option. Because the IRS has terminated its determination letter program (except in limited circumstances), plan sponsors may find the model language helpful as they consider design changes to their defined benefit plans for 2018.

The Tivol Decision – Must An Employer Challenge The Issuance of an MCHR Right-To-Sue Letter By Filing A Writ of Mandamus?

The Missouri Supreme Court recently issued an opinion that clarifies when it is appropriate to challenge the issuance of a Missouri Commission on Human Rights (“MCHR”) right-to-sue letter.

Mistaken Use In Sales Contract Of Spec Sheet For A Different Aircraft Is Held To Void Buyer’s Purchase Obligation

The importance of selecting the correct specification sheet is driven home in a recent decision of the Federal District Court for the Western District of New York.

OSHA Issues New Guidance on Process Safety Management

OSHA recently published a guidance document to help petroleum refineries comply with OSHA’s Process Safety Management (PSM) standard, 29 CFR 1910.119, distilling lessons learned by OSHA over the past ten years from the Petroleum Refinery PSM National Emphasis Program (NEP).  The OSHA guidance serves as a road map for process safety professionals to understand specific areas that OSHA will focus on during a PSM audit and areas most likely for OSHA to find gaps in PSM programs.

Cyber-attacks – A Universal Issue

The Federal Bureau of Investigation has cautioned organizations, regardless of industry, that cyber-attacks continue to increase and evolve. Cyber-attacks often target digital files containing sensitive and proprietary data. Thus, the operational, financial and reputational impact caused by cyber-attacks to an organization, either directly or through its service providers, can be significant.

To illustrate the widespread acknowledgement across industries of the importance of cybersecurity, this article describes: 1) best practices identified by the Securities and Exchange Commission Office of Compliance Inspections and Examinations for designing cybersecurity programs, and 2) guidance issued by the Department of Health and Human Services Office for Civil Rights under the Health Insurance Portability and Accountability Act for responding to cyber-attacks.

The Ins and Outs of Opt-out Incentives

As annual open enrollment season approaches, many employers may be evaluating ways in which to control rising health plan costs. One strategy frequently considered is a financial incentive for employees to waive or opt out of the employer-sponsored group health coverage. Although such “cash-in-lieu” or “opt-out” arrangements have long been common, they raise potential problems under the Affordable Care Act (“ACA”), as well as a number of other federal laws.

Ninth Circuit: Seller is not liable for calls made by telemarketer in violation of the Telephone Consumer Protection Act

In a recent decision that may affect any company that sells products or services using telemarketers, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s grant of summary judgment in Jones v. Royal Admin. Servs., Inc. in favor of a product seller, holding the seller was not vicariously liable for calls made by a telemarketer in violation of the Telephone Consumer Protection Act[1] (TCPA) because the telemarketer was an independent contractor.

Eleventh Circuit: Consumers may “partially revoke” consent to be called by automatic dialing systems

In a new decision that may have important implications for telemarketers and others using automatic dialing systems, the United States Court of Appeals for the Eleventh Circuit held in the case of Schweitzer v. Comenity Bank that the Telephone Consumer Protection Act (TCPA) allows a consumer to partially revoke his or her consent to receive automated telemarketing calls.

FBS Athletic Directors’ Compensation Survey

We reviewed all forms of compensation for the athletic directors at National Collegiate Athletic Association member institutions of the Football Bowl Subdivision (“FBS”).

What property owners need to know about new registration requirements

Missouri Governor Greitens recently signed into law, RSMO §347.048, a new registration requirement affecting limited liability companies (LLCs) that own and either rent or lease real property, or own vacant real property, located in Kansas City, Missouri or Independence, Missouri.

Federal Court Says EPA Too Stringent on Recycling and Reclamation of Hazardous Secondary Materials

Companies that beneficially reuse hazardous secondary materials by recycling or reclaiming those materials rather than discarding them as hazardous waste need to be aware of a new federal court ruling that may provide additional flexibility in the reuse and recycling of those materials. In its July 7, 2017, opinion in Am. Petroleum Inst. v. EPA, No. 09-1038, slip op. (D.C. July 7, 2017), the U.S. Court of Appeals for the District of Columbia struck down two key elements of the EPA’s 2015 Final Rule aimed at revising EPA’s “Definition of Solid Waste”: Factor 4 of the legitimacy test (i.e., “toxics along for the ride”) and, in pertinent part, the Verified Recycler Exclusion pertaining to reclamation under RCRA.

Major Changes to Missouri Human Rights Act Signed Into Law by Governor Greitens

On Friday, June 30, 2017, Missouri Governor Eric Greitens signed Senate Bill 43 into law. The Bill implements significant changes to the Missouri Human Rights Act (“MHRA”) and will likely have a significant impact on the litigation of MHRA claims. When he signed the legislation, Governor Greitens touted Senate Bill 43 for bringing Missouri law in closer alignment with the standards under federal law and 38 other states’ laws.

CERCLA Due Diligence Requirements Revised to Reflect Updated Phase I Standard for Forested and Rural Land

Purchasers of rural and forested land need to be aware of a recent change in EPA’s environmental due diligence rules. On June 20, 2017, EPA published a Direct Final Rule in the Federal Register, amending the All Appropriate Inquiries (AAI) Rule, 40 CFR Part 312, to reflect 2016 updates to ASTM E2247, a standard for Phase I investigations on rural and forested land.

Sale of New Aircraft With Used Engine Supports Claim of Fraud

The Texas Court of Appeals in Dallas ruled this week that a buyer purchasing a new aircraft from the manufacturer made a submissible case of fraud against the seller when it introduced evidence that one of the aircraft engines had previously been used on another aircraft, and that this fact had not been fully disclosed to the buyer.

7th Circuit Holds That Title VII’s Prohibition on Sex Discrimination Includes A Prohibition on Sexual Orientation Discrimination

On April 4, 2017, the en banc Seventh Circuit Court of Appeals overruled its own precedent and became the first Circuit to hold that discrimination on the basis of sexual orientation can constitute unlawful sex discrimination under Title VII.

Requirements for Arizona employers to stay in compliance with new paid sick leave law

In November, 2016, voters in the State of Arizona adopted Proposition 206, known as The Fair Wages and Healthy Families Initiative. As of July 1, 2017, all employers in Arizona must provide employees with paid sick leave.

The Second Circuit issues potentially impactful ruling on revocation of consent to be called under the Telephone Consumer Protection Act when that consent is given as bargained-for consideration for a binding contract

Congress enacted the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., (TCPA) to protect consumers from “[u]nrestricted telemarketing, which it determined to be “an intrusive invasion of privacy.” The TCPA prohibits, among other conduct, telephone calls to residential phone lines or cell phones using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party.

Subsurface Intrusion now a Factor for NPL Listings According to New EPA Final Rule

On May 22, 2017, EPA finalized a new rule establishing subsurface intrusion as a new component of the Hazard Ranking System (HRS), the principal mechanism for placing contaminated sites on the National Priorities List (NPL).

Denver Post Supports AG’s Appeal of Martinez Case to Colorado Supreme Court

As stated here in an earlier post, the Martinez decision, if upheld by the Supreme Court, has major implications for all fossil fuel as well as hardrock mineral development in the state of Colorado.

When is a seller liable for illegal calls made by a third party telemarketer? Fleshing out vicarious liability under the Telephone Consumer Protection Act

Using a telemarketer to market goods or services can be extremely costly to the seller if the telemarketer conducts its business in a manner that violates the Telephone Consumer Protection Act (TCPA). Penalties for violations of the TCPA range from $500 to $1,500 per call. And with call or text campaigns that may reach thousands of recipients, or even millions – the potential liability can be astronomical. It should be no surprise TCPA class action lawsuits are flourishing.

By the Numbers: 2016-2017 Autonomy 5 Men’s Basketball Assistant Coach Contracts

AthleticDirectorU has teamed with Spencer Fane to provide unprecedented insight into coaching contracts and salaries. Tonight is the first in a series aimed to provide context and clarity.

The Fiduciary Rule is Alive

According to U.S. Labor Secretary Alexander Acosta, the Department of Labor’s Fiduciary Rule will become effective on June 9th. As discussed in our May 9th article, the Rule’s expanded definition of “fiduciary” will apply, and advisers and financial institutions providing investment advice as fiduciaries must comply with the Rule’s “impartial conduct” standards, beginning on June 9, 2017. At this time, the full scope of the Fiduciary Rule and its related prohibited transaction exemptions will be applicable on January 1, 2018.

Treatment of “Collateral” Employees Under Retirement Plans

It is common for employers to contract with one or more third parties (sometimes referred to as “leasing companies”) to provide individuals to perform services for the employer. Various issues may arise regarding the treatment of such individuals under a retirement plan maintained by the employer.

The Future of Oil and Gas Development in Colorado – Appeal by Attorney General of the Martinez Case Raises the Stakes

On May 18, 2017, the Colorado Attorney General filed an appeal with the Colorado Supreme Court seeking to overturn the recent 2-1 decision of the Colorado Court of Appeals which arguably conflicts with the long-standing interpretations embraced by the Colorado Oil and Gas Conservation Commission (“OGCC”) related to its organic statute.

EPA Administrator Consolidates Authority to Select Costly CERCLA Remedies

EPA Administrator Scott Pruitt recently redelegated to the EPA Administrator the authority to select $50 million plus site cleanup remedies under CERCLA Records of Decision or RODs. Some years ago, such authority had been delegated to the Regional Administrators in each EPA Region.

Oklahoma – New Law Requires the Losing Party to Pay Attorney Fees

HB 1470, signed into law last week, does away with the “American Rule,” which impacts which party is responsible for attorney fees at the conclusion of a lawsuit. Set to go into effect in November 2017, the new law requires the court to award attorney fees to the prevailing party – paid for by the non-prevailing party.

Federal Court in Missouri holds technical failure to comply with the FCC’s TCPA opt-out notice requirements on fax advertisements does not confer standing on recipient who consented to receive the faxes

The FCC’s TCPA “opt-out” notice requirements for sending solicited faxes continues to be weakened.

DOL’s Fiduciary Rule Countdown

For investment advisers and financial institutions, the countdown to compliance with the Department of Labor’s new “conflict of interest” rule ends on June 9, 2017. The Department of Labor (“DOL”) issued a final rule on April 7, 2017, that delays the original applicability date of its conflict of interest regulation (the “Fiduciary Rule”) and its related prohibited transaction exemptions for 60 days, creating a “Transition Period” that starts on June 9, 2017, and ends on December 31, 2017.

St. Louis City Minimum Wage Set To Increase to $10 Per Hour

Today, the Circuit Court for the City of St. Louis, Missouri lifted an injunction that had blocked a St. Louis City ordinance increasing the minimum wage for St. Louis City businesses. This action came after the Missouri Supreme Court ruled that state law did not prohibit the higher local minimum wage.

Shopping for Cyber Insurance? Initial Lessons Learned from the Courts

The burgeoning multi-billion dollar cyber insurance market is expected to continue its 25%+ annual growth over the next few years. Despite this dramatic growth, the market is plagued with uncertainty over the meaning of key policy terms and scope of coverage. The lack of both uniformity in cyber policy language and judicial guidance interpreting policy language prevent companies from confidently assessing their loss exposure in the event of a major data breach.

DOL Fiduciary Rule Enforcement – Confusion and Disruption Relief

The Department of Labor (“DOL”) has proposed to delay for 60 days the “applicability date” of the Fiduciary Rule (“Rule”), and the new and revised prohibited transaction exemptions related to the Rule. The proposed delay has created confusion within the financial services industry because it is not certain that a final rule implementing the delay can be published (and become effective) before the Rule’s April 10th applicability date. In response to the confusion, the DOL issued Field Assistance Bulletin 2017-01 (“Bulletin”) announcing a temporary enforcement policy that assures advisers and financial institutions that the DOL will not seek to enforce the Rule or the related prohibited transaction exemptions in the event the Rule becomes applicable before it is officially delayed.

IRS Clarifies Permissible Substantiation Procedures for Hardship Withdrawals

In recent years, sponsors and administrators of 401(k) and 403(b) plans have received conflicting advice on the steps they should take to substantiate an employee’s entitlement to an in-service withdrawal on account of financial hardship. For instance, an April 2015 IRS newsletter seemed to require that plan sponsors obtain and retain documentary proof of an employee’s entitlement to a hardship withdrawal. However, two recent internal IRS memos outline a permissible approach to this substantiation requirement that need not involve conditioning a hardship withdrawal on an employee’s provision of supporting documents. Plan sponsors should thus consider this new alternative.

Stormwater Runoff from Construction Activities Subject to New EPA 2017 General Permit

Construction companies, general contractors, developers, and property owners involved in land clearance and disturbance activities will want to take note of the new Stormwater Construction General Permit (“Construction General Permit”) issued by the United States Environmental Protection Agency (“EPA”) on February 17, 2017. As with earlier Construction General Permits, the 2017 permit applies to land clearance and disturbance activities greater that one acre and requires site operators to comply with best management practices (“BMPs”), effluent limits, and other permit requirements, including developing a Stormwater Pollution Prevention Plan (“SWPPP”).

The EEOC’s Proposed Enforcement Guidance on Unlawful Harassment

The Equal Employment Opportunity Commission (EEOC) has issued proposed enforcement guidance on unlawful harassment (the “Proposed Guidance”). The Proposed Guidance is intended to be a follow-up to the EEOC’s Select Task Force on the Study of Harassment in the Workplace in 2016 (“2016 Harassment Study”). The Proposed Guidance provides a detailed explanation of the EEOC’s position on the three components of a hostile work environment claim: 1) covered bases and causation; 2) hostile work environment threshold; and 3) liability.

SEC Issues Robo-Adviser Guidance

The increased popularity of automated digital investment advisory programs (often called “robo-advisers”) has drawn the attention of the Securities and Exchange Commission (“SEC”). On February 23, 2017, the SEC’s Division of Investment Management issued Guidance Update No. 2017-02 (the “Update”). That Update provides guidance to robo-advisers as they seek to satisfy their disclosure, suitability, and compliance obligations under the Investment Advisers Act of 1940 (“Advisers Act”). On the same day, the SEC’s Office of Investor Education and Advocacy issued an Investor Bulletin to educate investors about robo-adviser programs.

DOL Proposes 60-Day Delay for Fiduciary Rule

After nearly a month of regulatory machinations and behind-the-scenes lobbying, the Department of Labor has released a proposed rule that would delay the “applicability date” of its recently enacted “conflict of interest” (or “fiduciary”) regulation (the “Fiduciary Rule”). The 60-day delay in the applicability of the Fiduciary Rule would have only an indirect effect on employers, but is of great interest to investment advisors and other service providers.

IRS Extends Deadline for Providing Small-Employer HRA Notices

As explained in our December 19, 2016, article, the 21st Century Cures Act allows small employers (those that are not subject to the Affordable Care Act’s “play-or-pay” requirements because they have fewer than 50 full-time employees, including full-time equivalents) to offer their employees a premium reimbursement arrangement that would otherwise violate the ACA. By establishing a “qualified small employer health reimbursement arrangement” (or “QSEHRA”), such an employer may subsidize its employees’ purchase of individual health insurance coverage. In its recent Notice 2017-20, the IRS has granted these employers additional time to comply with the QSEHRA notification requirement.

Steps for Employers to Avoid Violating the Fair Credit Reporting Act

The federal Fair Credit Reporting Act (“FCRA”) outlines a strict procedure that employers must follow when they obtain criminal background reports, credit histories, and other background reports on employees and applicants from a third party which is engaged in the business of preparing such reports. All such reports are called “consumer reports” under FCRA.

IRS: No More Closing Agreements Under FICA “Special Timing Rule”

A recent IRS Chief Counsel Memorandum (AM 2017-01) raises the stakes for employers that fail to apply the proper FICA taxation rules to nonqualified deferred compensation. An option previously available to those employers has been taken off the table. Under this option – which required a formal “Closing Agreement” with the IRS – both employer and employee FICA taxes could be minimized by voluntarily paying those taxes for years as to which IRS assessments were otherwise barred under the Tax Code’s three-year statute of limitations. Without this correction option, employers have an even greater incentive to apply the proper FICA taxation rules to their deferred compensation arrangements.

Right to Work Enacted in Missouri

Governor Greitens signed the Missouri Right to Work Bill on February 6, 2017. See Missouri Senate Bill 19. It becomes effective on August 28, 2017 and applies to any new collective bargaining agreements or renewals, extensions, amendments, or modifications after the effective date.

Trump Orders DOL to “Reconsider” Fiduciary Rule

On Friday, February, 3, 2017, President Trump issued a Memorandum directing the Secretary of Labor to “re-examine” the Department of Labor’s final regulation defining “fiduciary” investment advice (sometimes referred to as the “Fiduciary Rule” or the “Conflict of Interest Rule”), and to consider whether the Rule should be revised or rescinded. The Rule, which significantly expands the circumstances under which an individual becomes a “fiduciary” by reason of providing investment advice for a fee, was finalized in April of 2016, and technically became effective last July, but was drafted such that its provisions generally do not become “applicable” to financial advisers until April 10, 2017.

EPA and OSHA Increase Civil Penalties – Days Before New Administration

In January 2017, both EPA and OSHA increased civil penalties for new enforcement cases. While the increases became effective just days before the new Administration took office, the increases are a result of Congressional action in 2015 to annually adjust civil penalties for inflation by January 15 of each new calendar year.

DOL Disability Regulations and the Impact on ERISA Plans

The Department of Labor has issued final regulations under Section 503 of ERISA that purport to enhance the disability benefit claims and appeals process for plan participants. These regulations amend the DOL’s disability claims procedure regulations issued in 2002. The new regulations generally affect the procedures for filing disability benefit claims, providing notice of adverse benefit determinations, and appealing adverse benefit determinations.

OSHA Releases “Recommended Practices” for Anti-Retaliation Programs

The Occupational Safety and Health Administration (“OSHA”) recently released so-called “recommended practices” directed at employers who may be covered by any of the 22 whistleblower protection statutes enforced by OSHA. While these “recommended practices” are not mandatory, they are provided by OSHA to assist employers in creating workplaces free from retaliation.

Summary of the Guidance Issued by ICBA on ADA Accessibility for Websites

The Independent Community Bankers of America (“ICBA”) reached out to the Department of Justice (“DOJ”) asking for guidance regarding whether the DOJ will adopt the standards in the World Wide Web Consortium’s Web Content Accessibility Guidelines (“WCAG”). The DOJ stated that although it has not yet adopted the WCAG standards, it is leaning toward adopting the standards. Furthermore, the DOJ stated that in its view, ADA requirements to provide accessible technology is an “already-existing obligation” and compliance is expected unless a business can prove an undue burden.

SEC Guidance Update and the DOL’s Fiduciary Rule

In December, the Division of Investment Management of the Securities and Exchange Commission issued Guidance Update No. 2016-06. The Update provides disclosure and procedural guidance to address potential issues for mutual funds responding to the Department of Labor’s adoption of the Conflict of Interest Rule. To address concerns by financial intermediaries that variations in mutual fund sales loads may violate the Rule, Funds are exploring various options, including changing fee structures and creating new share classes. Such changes may impact fiduciary decisions regarding a plan’s investments and compensation arrangements.

Amending College Coach Contracts: Let Prudence Not Panic Be Your Guide

Coach Corso’s familiar caution invites consideration of the velocity with which the contracts of his former college football coach colleagues are being renegotiated.

Governor Greitens Orders Review of Every Missouri Regulation

On January 10, 2017, Missouri Governor Eric Greitens signed Executive Order 17-03 (the “Order”). Among other things, the Order compels all state agencies to review each and every Missouri regulation appearing in the Code of State Regulations that falls within their jurisdiction.

Cures Act Allows for Small-Employer HRAs

Before leaving DC for the winter holidays, Congress and President Obama agreed on a provision granting small employers a bit of relief from the Affordable Care Act. Tucked at the very end of the 21st Century Cures Act is a provision allowing certain small employers to offer their employees a health reimbursement arrangement (“HRA”) that need not be “integrated” with a group health plan. Employees may then use their employer’s pre-tax contributions to such an HRA to pay premiums under individual health insurance policies.

White Collar Update: The Supreme Court Weighs In On Bank Fraud

With Monday’s decision in Shaw v. U.S., the Supreme Court cleared up any ambiguity regarding who is protected by the bank fraud statute (18 U.S.C. §1344) and, along the way, continued to encourage federal prosecutors to rely on the powerful and far-reaching bank fraud statute. In saying that fraud against a customer is fraud against a bank, the decision continues the Court’s strong support of the statute and intolerance for technical, loophole-seeking defenses.

EPA Issues Final Hazardous Waste Generator Improvements Rule

On November 28, 2016, EPA published the final version of the Hazardous Waste Generator Improvements Rule (the Rule) in the Federal Register. Promulgated under the Resource Conservation and Recovery Act (RCRA), the Rule updates EPA’s regulations governing generators of hazardous waste, most of which EPA promulgated in the 1980s. The Rule significantly revises the hazardous waste generator requirements.

Court Halts New Overtime Rules on Nationwide Basis

Just as employers across the nation were bracing for the new rules governing white-collar exemptions to the overtime laws (“the New OT Rules”), a federal district court in Texas blocked the Department of Labor from implementing them. The New OT Rules—which drastically increased the minimum salary threshold for employees classified as exempt under the executive, administrative and professional employee exemptions—were set to take effect on December 1, 2016.

ACA-Reporting Deadline Extended by 30 Days

The Affordable Care Act (“ACA”) imposed additional reporting requirements on health coverage providers (including self-funded employer plans) and “applicable large employers” (those with 50 or more full-time employees). In Notice 2016-70, the IRS has granted coverage providers and employers 30 more days to issue the appropriate ACA-reporting forms to their insureds and full-time employees for coverage provided during 2016. Rather than January 31, 2017, these Forms 1095-B and 1095-C will now be due by March 2, 2017. In addition, the IRS has extended by one year the period of “good-faith compliance” with these reporting rules. As of now, however, the IRS has not extended the deadline for coverage providers and employers to transmit these ACA-reporting forms to the IRS.

DOL’s Persuader Rule Permanently Enjoined on a Nation-wide Basis by Texas District Court – May Be Sign of Things to Come for Other DOL Regulations

On November 16, 2016, the United States District Court for the Northern District of Texas (Lubbock Division) entered an order holding that the Department of Labor’s Persuader Advice Exemption Rule is unlawful and should be set aside pursuant to 5 U.S.C. § 706(2). The Persuader Rule regulations are now subject to a permanent nation-wide injunction and the DOL will be prohibited from enforcing the regulations unless and until the district court’s order is revised or reversed on appeal.

Getting Ready for the Presidential Election – Voting Leave Law

With the Presidential Election just days away, employers need to be ready to accommodate workers who may want or need to leave during the workday to cast their votes. The purpose of this blog post is to help employers prepare for the anticipated surge of political activity by providing a summary of the voting leave laws for the states of Arkansas, Colorado, Illinois, Iowa, Kansas, Missouri, Oklahoma and Texas.

2017 Inflation Adjustments

Following recent announcements by both the Internal Revenue Service and the Social Security Administration, we know most of the dollar amounts that employers will need to administer their benefit plans for 2017. The key dollar amounts for retirement plans and individual retirement accounts (“IRAs”) are shown on the front side of our 2017 limits card.

Certificate of Airworthiness Ineffective When Noncompliance with FAR is Present

In Munich v. Columbia Basin Helicopter, Inc., the U.S. District Court for the District of Oregon found that a contract term requiring delivery of an airworthiness certificate by the seller may be breached even when a certificate is provided at the time of delivery.

Washington Decision Rejects Seller’s Reliance on Boilerplate Warranty Disclaimer

The Seattle seller of a used aircraft discovered that its use of an “as is” clause in its general disclaimer of warranties did not suffice to exonerate it from the consequences of delivering an unairworthy aircraft, even after the buyer’s conditional acceptance of the aircraft.

EPA Issues Guidance Encouraging Greener Cleanup Activities

On August 2, EPA issued a guidance document encouraging parties to opt for “greener cleanup activities” when conducting CERCLA response actions, to reduce the environmental costs associated with these cleanups. The guidance document defines “greener cleanup activities” as “practices or technologies that reduce or mitigate the environmental impacts of CERCLA removal and remedial actions, while meeting regulatory and other cleanup requirements.” Examples include generating renewable energy on-site, using energy-efficient equipment, and choosing land management methods that do not require mowing. The guidance document builds on EPA’s 2009 Principles for Greener Cleanups, a general statement of intention to manage CERCLA cleanups in a more environmentally sustainable manner.

Retail and Consumer Product Hazardous Waste – Update on Reverse Distribution and Aerosol Cans by EPA

On September 12, 2016, EPA issued its “Strategy for Addressing the Retail Sector under RCRA’s Regulatory Framework.” The strategy document sets forth three actions the agency is expected to finalize in the short-term to help ease the RCRA burden on managing retail and consumer products that may trigger RCRA hazardous waste characteristics or RCRA listings once a decision to discard is made.

A New Type of Student Union – the NLRB’s decision in Columbia University

In its August 23, 2016 decision in Columbia Univ., 364 N.L.R.B. No. 90 (2016), the National Labor Relations Board (the “Board”) ruled that graduate students working as teaching and research assistants at private universities qualify as employees for collective bargaining purposes under the National Labor Relations Act (“NLRA”) and thereby paved the way for graduate students to join or form unions. Depending on the size of the academic institution, the unionization of graduate employees could pose not only a significant financial burden but also a disruption to the completion of academic programs. This type of student union may be one that not all campuses are ready for.

EEOC’s Revised EEO-1 Rule Seeks to Identify Equal Pay Discrimination

Companies should consider examining the extent to which there may be pay disparities in their workforce. Current events and the EEOC’s revised EEO-1 Rule suggests that all regulatory agencies will be taking a much closer look at corporate pay practices in an attempt to try and root out unintentional bias that is identifiable through inexplicable differences in pay between men and women (as well as between other protected categories).

Avoiding Cleanup Liability for Industrial and Commercial Properties Under New Kansas Law

Effective July 1, 2016, buyers of industrial and commercial properties in Kansas may qualify for a Certificate of Environmental Liability Release (CELR) under the state’s new Contaminated Property Redevelopment Act. This liability release for pre-existing contamination is important for prospective purchasers of industrial and commercial properties by helping to facilitate those transactions and allow the buyer to avoid state cleanup responsibility. But not only buyers benefit, as sellers can also demonstrate a framework that allows the transaction to proceed and maximize the property value without the buyer or seller taking on unnecessary risk if the proper steps to obtain the CELR are followed.

New 50(d) guidance

The Internal Revenue Service (IRS) has recently issued temporary regulations with respect to income inclusion rules under Section 50(d) of the Internal Revenue Code (the Code). Guidance on Section 50(d) has been anticipated primarily in the historic tax credit (HTC) arena, due to its implications for the pass-through of tax credits under a master tenant structure.

A federal district court in Missouri rejects an FDCPA claim based on the legal theory that post-judgment interest in Missouri nontort cases must be specifically awarded in the judgment to be collectable

We are pleased to report a victory in the Eastern District of Missouri in an FDCPA case concerning the collection of statutory post-judgment interest on an unpaid Missouri state court judgment.

Supreme Court Refuses to Enforce the DOL’s FLSA Regulation on Car Dealership Service Advisors

On June 20, 2016, the Supreme Court of the United States held that the Department of Labor’s (“DOL”) 2011 regulation classifying “service advisors” as eligible for overtime pay under the Fair Labor Standards Act (“FLSA”) was not enforceable.

Document Retention Policy for Banks

Document retention sounds like a boring topic until you realize that your bank can be subject to huge monetary damages and possible regulatory action if it doesn’t handle document retention correctly. In the old days, banks could simply keep every document forever to be on the safe side. That isn’t a practical alternative in today’s environment. Nowadays, retaining documents after their useful date can actually harm the bank.

Injunctive Relief Summary

This summary covers (i) the types of injunctive relief, and when it is obtained; and (ii) what is necessary to obtain injunctive relief.

OSHA Reporting Rules Discourage Use of Mandatory Post-Accident Drug Testing

On May 12, 2016, OSHA published the final version of new reporting rules intended to “Improve Tracking of Workplace Injuries and Illnesses.”

Internal Investigations – Best Practices

Organizations conduct internal investigations when confronted with significant legal and financial risks. A successful internal investigation follows recognized best practices. Spencer Fane LLP presents this best practices information to inside counsel. It is based on Spencer Fane’s experience in conducting internal investigations, and on case law, ethics rules and the experience of other law firms. We believe this is a valuable resource that will support inside counsel’s oversight and decisions in internal investigations.

DOL Issues New, More Expansive, Interpretation of Persuader Rule

In March of this year, the Office of Labor-Management Standards (“OLMS”) issued new regulations regarding the Persuader Rule. See 29 CFR Parts 405 and 406. The new regulations, which become fully effective on July 1, 2016, require employers and their law firms or consultants to comply with federal reporting and disclosure requirements if they engage in certain labor relations advisory activities.

IRS Issues Long-Awaited Guidance Regarding (Nonqualified) Deferred Compensation Arrangements of Governmental and Tax-Exempt Employers

Deferred compensation arrangements that are not “tax-favored” retirement plans under Code Sections 401(a), 403(b), or (in the case of a governmental employer) 457(b) are generally referred to as “nonqualified” plans. So long as a nonqualified plan is “unfunded” (meaning the amounts deferred remain the property of the employer, and subject to the employer’s general creditors, until paid), the amounts deferred are generally not taxable until they are “paid or otherwise made available” to the employee.

EEOC Releases Sample ADA Notice for Employee Wellness Programs

In our June 2, 2016, article summarizing final wellness program regulations issued by the EEOC under Title I of the Americans with Disabilities Act (“ADA”), we noted the EEOC’s promise to post on its website a sample notice by which employers could satisfy the ADA’s notification requirements. The EEOC has today posted such a sample notice, along with a series of FAQs shedding further light on the notification requirement. Although employers are not required to use this sample notice, they should make sure that their notice covers all the points addressed in the EEOC sample.

New EEOC Guidance on Employee Wellness Programs

Final regulations issued by the Equal Employment Opportunity Commission (“EEOC”) under both the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”) will require modifications to many employee wellness programs. These modifications may include the deletion of certain questions from health risk assessments, additional employee notification requirements, and a reduction in the incentives used to discourage tobacco usage. Although certain aspects of these regulations will not apply until the first day of the 2017 plan year, others are already in effect.

Who’s a Fiduciary Now? Understanding the Department of Labor’s New Definition

The sky isn’t falling, but in a very real sense the retirement world is changing. After months of angst from many in the industry and boisterous posturing by members of Congress, on April 8, 2016, the Department of Labor released a final regulation that more broadly defines who is an “investment-advice” fiduciary for purposes of ERISA and the Internal Revenue Code.

Volume 7A, MISSOURI PRACTICE SERIES, Business Organizations in Missouri (West 1991)

The multivolume Legal Forms is the most extensive collection of Missouri forms and analysis available in the state. The forms are annotated, well-indexed, and cross-referenced to simplify drafting, and are accompanied by commentary, analysis, and drafting tips. The collection covers all major areas of business practice, including:

  • Real estate transactions
  • Leases
  • Building and construction agreements
  • Estate planning
  • Business organizations
  • Much more

Department of Labor Releases New Overtime Rules

The long anticipated DOL overtime rules have been issued. On May 18, 2016, the Department of Labor released the Final Rule governing the “white-collar exemptions” to the Fair Labor Standards Act’s (“FLSA”) overtime pay requirements. These long-awaited regulations will have substantial implications for most employers. The final rule is set to become effective on December 1, 2016.

Closing on Sale and Acceptance of Aircraft with Bill of Sale Specifying “As Is” Delivery Waives Contract Provisions Requiring Seller to Correct Discrepancies and Deliver an Airworthy Aircraft

The aircraft buyer in Wedderburn Corporation v. Jetcraft Corporation learned the hard way that a contract term calling for delivery of an airworthy aircraft with discrepancies repaired would not protect the buyer under all circumstances.

DOL Releases Final Regulation Defining Investment Fiduciaries

After years of effort, the Department of Labor released final rules on April 6, 2016, that will substantially alter the way investment advice is provided to ERISA plans, their participants, and even non-ERISA IRAs.

CJR “To-Do-List”

With the effective date for the Comprehensive Care for Joint Replacement (“CJR”) program now upon us, we wanted to take a moment to highlight key steps that affected hospitals should be pursuing if they wish to realize the benefits of – or at a minimum, avoid potential adverse consequences of – this new payment model.

Supreme Court Allows Representative Evidence to Establish Liability in a FLSA Collective Action

Federal Rule of Civil Procedure 23(b)(3) requires that, before a class is certified, a district court must find that questions of law or fact common to class members predominate over questions affecting only individual members.” In a recent decision by the Supreme Court, the majority explained that “[i]n a case where representative evidence is relevant in proving a plaintiff’s individual claim, that evidence cannot be deemed improper because the claim is brought on behalf of a class.” Tyson Foods, Inc. v. Bouaphakeo, et al., No. 14-1146, 2016 WL 1092414 (S. Ct. 2016).

New OSHA Silica Dust Rule to Impact Over 675,000 Workplaces, Biggest Impact on Construction Industry

On March 25, 2016, 81 Fed. Reg. 16286, OSHA issued a new final rulemaking to reduce silica dust exposure that will directly affect more than 2 million construction workers who drill, cut, crush, or grind silica-containing materials such as concrete and stone, and 300,000 workers in general industry operations such as brick manufacturing, foundries, and hydraulic fracturing. OSHA explains that silica dust exposure occurs in common workplace operations involving cutting, sawing, drilling, and crushing of concrete, brick, block, rock, and stone products (such as construction tasks), and operations using sand products (such as in glass manufacturing, foundries, sand blasting, and hydraulic fracturing).

EPA to Focus on RMP Chemical Accident Prevention and Safety, Issues Proposed Rule and Will Increase Enforcement

Businesses that store and use flammable and toxic chemicals that are regulated under EPA’s Risk Management Plan (RMP) Program at 40 CFR Part 68 need to be aware of recent actions by the U.S. Environmental Protection Agency aimed at curtailing chemical accidents and releases through new proposed regulations and also enforcement. Facilities potentially subject to EPA’s initiatives include chemical plants and refineries, POTWs that use chlorine as a disinfectant, as well as those companies that use and store bulk anhydrous ammonia as an industrial refrigerant (dairy operations, food and pharmaceutical manufacturing, cold storage warehousing) or as fertilizer (agricultural cooperatives, fertilizer distribution).

You Can Run But You Can’t Hide: HIPAA Audits are Coming

On March 21, 2016, the HHS Office for Civil Rights (OCR) announced that it has begun “Phase 2” of audits of covered entities and their business associates for compliance with the HIPAA Privacy, Security and Breach Notification Rules (“HIPAA Rules”). Phase 1 was limited to a pilot program designed to develop a standard set of audit protocols.

Environmental Enforcement and Crimes – EPA and DOJ Announce New Initiatives and How They Affect You

On February 18, 2016, the U.S. Environmental Protection Agency announced its new National Enforcement Initiatives aimed at protecting public health and national pollution challenges for FY 2017-2019. These new initiatives, coupled with other recent significant announcements by the U.S. Department of Justice regarding a new emphasis for individual accountability for corporate malfeasance (“Yates Memo”) along with an expanded focus on DOJ’s and OSHA’s worker endangerment initiative, underscore a new paradigm shift for businesses and individuals in how EPA and the DOJ intend to enforce the nation’s environmental, health and safety (“EHS”) laws over the coming years.

EEOC Now Releasing Position Statements to Charging Parties

When an employee or former employee files a charge of discrimination against their employer, the EEOC has the authority to investigate. As part of the investigation, the EEOC asks the employer to submit a position statement explaining its side of the story.

Yet Another Data Sheriff In Town: CFPB Issues Its First Data Security Enforcement Action

On March 2, 2016, the CFPB finalized a Consent Order with Dwolla, an online payment platform, for violations of the CFPA.  It is the CFPB’s first enforcement action related to data privacy and security.  It is notable because Dwolla appears to have become an enforcement target due solely to its robust claims about security, and not due to any data breach.  It also places obligations on Dwolla’s Board to become responsible for data privacy and security in the company.

EU-US “Privacy Shield” Disclosed to the Public

The past week has seen two key developments in EU-US data privacy relations — the US enacted the Judicial Redress Act into law, and EU and US officials published the proposed EU-US Privacy Shield protocol for transatlantic data transfers.  While the Privacy Shield still has a gauntlet of EU bureaucracy to navigate, companies that relied on Safe Harbor should begin to plan now to comply with the robust new requirements of Privacy Shield, or implement other measures to satisfy the EU Privacy Directive to import EU data to the US.

A Tidal Wave of Meaningful Use Audits Hits the Midwest – 5 Steps to Take Now

The Centers for Medicare and Medicaid Services (“CMS”) provided over $20 billion in Meaningful Use incentive payments to hospitals and eligible professionals who attested to compliance with the EHR Incentive Program (the “Program”).

OSHA to Focus Enforcement at Manufacturing Facilities in Kansas, Missouri, and Nebraska

Earlier this month, OSHA Region VII announced that it was launching a new Region-wide Local Emphasis Program in Kansas, Missouri, and Nebraska designed to address certain industries viewed by OSHA as high-hazard manufacturing industries because the injury and illness rates exceed the average for the private sector.

EPA Releases National Enforcement Initiatives

Beginning October 1, 2016, the U.S. Environmental Protection Agency (EPA) will target its enforcement efforts in seven different focused areas, including three areas designed to protect water quality, two initiatives aimed at reducing toxic air pollutants and reducing air pollution, an initiative to reduce accidental chemical releases from industrial facilities, and an enforcement initiative geared at energy extraction activities.

Providers Need to Take the “Necessary Steps” for HIPAA Compliance

On February 3, 2016, the U.S. Department of Health and Human Services issued a statement and released the opinion of the Administrative Law Judge who found in favor of the Office of Civil Rights (“OCR”) determining that a home health agency, Lincare, Inc. (“Lincare”) violated the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy Rule requiring Lincare, to pay $239,800 in civil money penalties. All covered entities should review the opinion and the OCR’s comments and begin taking any and all “necessary steps” to ensure HIPAA compliance and to make certain protected health information is adequately protected.

Three Key Take-Aways from CMS’ Final Rule on Reporting and Returning Overpayments

In the Centers for Medicare & Medicaid Services’ (“CMS”) Reporting and Return of Overpayments Final Rule, published February 11, 2016 (“Final Rule”), CMS has clarified some outstanding questions faced by healthcare providers and suppliers who may have received overpayments from the Medicare program.

President Obama Goes Big on Privacy and Cybersecurity

As part of a massive new initiative, Obama establishes the Federal Privacy Council and a national commission on cybersecurity

Making Contractor-Financing Work

Contractor-financed infrastructure projects can help the public sector tackle one of its most significant challenges. During the Great Recession, municipalities often opted to defer infrastructure maintenance and improvement projects to curtail budget shortfalls. Not surprisingly, the long-term useful life of neglected infrastructure suffered due to these fiscal constraints.

EU announces “Privacy Shield” agreement to replace Safe Harbor transatlantic data pact

  • U.S. organizations wishing to import data from EU subjects will be subject to much more “robust” privacy protocols
  • Final approval still faces hurdles

EEOC Seeks Additional Pay Information from Large Employers

In a nutshell – Last week, the EEOC unveiled its proposal to seek increased amounts of data from large employers in a stated effort to “combat the persistent gender gap in employee compensation.” Practically, the proposal revises the EEO-1 form. The EEOC’s proposed changes to the EEO-1 form will require all employers with 100 or more employees to submit the new EEO-1 form and provide substantial information regarding pay ranges and hours worked as well as salary data by race, gender and ethnicity.

HIPAA Hodgepodge

After more than ten years, HIPAA is still a hot topic. Here is a rundown of recent developments.

You’ve (Still) Got to Be Kidding: Supreme Court Holds ERISA Plan Participants May Ignore Reimbursement Provisions If They Spend the Money Fast Enough

The Supreme Court has handed down its latest in a long line of decisions on enforcing the reimbursement provisions of self-funded ERISA welfare plans. As evidenced by the Court’s lopsided 8-1 decision, the result in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan will not surprise those familiar with the law in this area. But as indicated by Justice Ginsburg’s indignant dissent, plan sponsors may find the decision downright bizarre. After all, it tells participants who double-recover for medical benefits paid by their employer’s health plan that they’re off the hook – if they spend the money fast enough.

DOL Guidance on Joint-Employer Standard Raises a Red Flag for Businesses

On Wednesday, January 20, 2016, the U.S. Department of Labor’s Wage and Hour Division (WHD) released an administrator’s interpretation that is intended to provide guidance to employers on the WHD’s position on the joint-employer standard under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.

Another Court Rejects EEOC Position on ADA and Wellness Programs

Following the lead of Seff v. Broward County, another federal court has disagreed with the EEOC on the scope of an ADA exemption for employee benefit plans. In EEOC v. Flambeau, Inc., the court held that this benefit-plan “safe harbor” could be used to justify a wellness program that included both a health risk assessment and a biometric screening.

EPA Revamps Voluntary Self-Disclosure Audit Policy

Businesses and companies seeking to qualify for penalty mitigation and relief by submitting voluntary self-disclosures under EPA’s Audit Policy need to be aware of significant changes and modifications that took effect in December 2015.

IRS Extends ACA-Reporting Deadlines

In a belated Christmas present, the IRS on December 28th extended the deadlines for large employers and health insurers to comply with certain reporting requirements imposed by the Affordable Care Act (“ACA”).  Notice 2016-4 grants an additional two months to provide statements to employees, and an additional three months to transmit those statements to the IRS.

Criminal Prosecution of Worker Safety Violations – New DOJ Initiative to Increase Criminal Enforcement of OSHA Matters

On December 17, 2015, the U.S. Department of Justice (DOJ) announced a major new initiative to increase the number of criminal charges in worker endangerment and worker safety cases. Although the DOJ and the Occupational Safety and Health Administration (OSHA) have had a worker endangerment initiative for a number of years, the new changes are intended to bolster the likelihood and number of criminal prosecutions which historically have languished, according to DOJ, due to the OSH Act’s misdemeanor criminal provisions.

Manufacturer’s Corner: A Word on Warranties of Future Performance

Courts sometimes have trouble determining whether a warranty explicitly extends to future performance.  A recent case provides refreshing clarity on the issue.

Proposed Extension of New Markets Tax Credit

Despite increased optimism in Congress’s ability to pass this year an extenders bill which would make certain temporary tax provisions permanent, House Ways and Means Committee Chairman Kevin Brady, R-Texas, has prepared a two-year “fallback” bill. The proposed bill contains provisions pertaining to both the low-income housing tax credit (LIHTC) and new markets tax credit (NMTC).

How to Remove a General Partner from a Real Estate Partnership

Default is an unfortunate reality in any partnership.  Though no one enters a partnership expecting the other party to default on its obligations, it poses a risk that must be properly addressed to mitigate the limited partner’s risk before the partnership is ever established.  This article will address the rights and remedies available to the limited partner when the general partner has failed to live up to its commitments, and the procedures that should be followed in obtaining relief.

IRS Issues Guidance for Integrated HRAs

In a recent Chief Counsel Advice (CCA 201547006), the IRS has provided guidance for employers wishing to offer health reimbursement arrangements (“HRAs”) that both (1) provide reimbursements on a tax-free basis, and (2) satisfy the “market reform” requirements of the Affordable Care Act (“ACA”). In particular, this CCA focuses on HRAs (and similar “employer payment plans”) that reimburse employees for medical premiums paid for coverage under a health plan maintained by a spouse’s employer.

Prohibited Transactions: Co-investments Involving Qualified Retirement Plans

Under both ERISA and the Internal Revenue Code, certain transactions involving qualified retirement plans and “disqualified persons” or “parties in interest” (such as a plan trustees) are prohibited. One example of a “prohibited transaction” involves a plan fiduciary (e.g., plan trustee) using plan assets to purchase property for his own benefit or as an indirect loan because he cannot afford the purchase without the plan assets (ERISA § 406).

Sexual Orientation Discrimination Claims Not Available Under MHRA, But Availability of Sex Stereotyping Claims Still an Open Question

On October 27, 2015, the Missouri Court of Appeals for the Western District issued an opinion holding that sexual orientation was not a protected category under the Missouri Human Rights Act (“MHRA”) and, as a result, the plaintiff’s sexual orientation discrimination claim was not cognizable under Missouri law. See Pittman v. Cook Paper Recycling Corp., 2015 WL 6468372 (Mo. App. W.D. Oct. 27, 2015). However, Judge Gabbert wrote a lengthy dissenting opinion and the majority opinion identified but declined to reach the question of whether a claim for sexual orientation discrimination would be actionable under the MHRA if the claim is framed as a claim for unlawful sex-based stereotyping.

Manufacturer’s Corner: Climate Change and Consumer Protection Statutes

A new theory of securities fraud may prove important (and dangerous) to manufacturers.

Manufacturer’s Corner: Highlighting Some Important Distinctions Between UCC Article 2 and CISG

If you’re like many manufacturers who sell internationally, your standard terms and conditions provide that the UN Convention on Contracts for the International Sale of Goods (“CISG”) does not apply to your transaction.  But, maybe they don’t, or maybe your disclaimer is ineffective (it happens a lot).  In those instances, it’s important to understand where CISG differs from Article 2 of the Uniform Commercial Code, which typically covers sales of goods within the United States.

Manufacturer’s Corner: Delivery Terms Have Important Tax Implications for Missouri Manufacturers

Today’s column is prompted by a recent decision by the Supreme Court of Missouri, in which the Court denied a Missouri manufacturer a sales tax refund.

Contract with Foreign Buyer Calling for Delivery in Airworthy Condition may Imply Compliance with Airworthiness Standards of Foreign Nation

In a recent decision in Daiichi Koku Co. v. J.E. Aero, Inc., the U.S. District Court for the Northern District of Illinois considered a claim in which the plaintiff, a Japanese air carrier, had entered into an Aircraft Purchase Agreement to acquire a used aircraft from an Illinois broker.

Use-It-Or-Lose-It Vacation Policies in Colorado – The Colorado Department of Labor’s New Stance

Historically in Colorado, employers could safely implement use-it-or-lose-it vacation policies without fear of consequences from the Colorado Department of Labor (“CDOL”). Those days are officially over. Effective January 1, 2015, the CDOL assumed new enforcement authority with respect to claim for nonpayment of wages or compensation. Pursuant to that authority, the CDOL issued limited guidance this week with respect to use-it-or-lose-it vacation policies. That guidance indicates that employers can no longer implement use-it-or-lose-it vacation policies without consequences.

2016 Inflation Adjustments

Following recent announcements by both the IRS and the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2016. The key dollar amounts for retirement plans and individual retirement accounts (“IRAs”) are shown on the front side of this card.

Spencer Fane Team Secures Court Order Striking St. Louis Minimum Wage Increase

On October 14, 2015, a St. Louis judge declared the city’s planned minimum wage increase invalid because it conflicts with the state minimum wage, currently set at $7.65 per hour. In August, the City of St. Louis passed an ordinance that would have eventually raised the minimum wage to $11.00 per hour by 2018. The first increase to $8.25 per hour was set to take effect on October 15, 2015.

Safe Harbor Under Siege – Is This The End For The EU-U.S. Safe Harbor?

The EU-U.S. Safe Harbor Framework (“Safe Harbor”) has provided companies on both sides of the Atlantic an efficient means to transfer personal information to and from the EU and the U.S. Recently, however, the Safe Harbor has come under attack. EU officials have opined that modern U.S. policy has eroded protections afforded under the Safe Harbor, resulting in the Safe Harbor no longer offering “adequate” protection as required by the EU Data Protection Directive 95/46/EC (“EU Directive”). Most recently, and perhaps the most concerning, is the opinion from Advocate General Yves Bot of the European Court of Justice (“ECJ”), whereby Bot recommended the Safe Harbor be declared invalid.

New Trademark Office Program Helps You Preserve Your Trademark Registration as Technologies Evolve

Starting September 1, the U. S. Patent and Trademark Office (USPTO) has instituted a pilot program to help you preserve your trademark registration if new technology replaces the format under which the underlying goods or services identified under the registration are offered for sale or provided to consumers.

4th Cir. Says It Is Unlawful to Fire Managers That Reasonably Refuse to Take Company’s Side During Internal Investigations

In DeMasters v. Carilion Clinic, the Fourth Circuit Court of Appeals clarifies what constitutes protected oppositional activities under Title VII and refuses to extend the FLSA’s “manager rule” to Title VII retaliation claims. This case serves as an important reminder to employers that managers relaying information about harassing conduct are protected by Title VII and cannot be disciplined for disagreeing with how the company is handling a particular complaint.

The Netflix Approach to HR – Could It Work for Your Company?

Here is a little food for thought for the week. As I’m sure many of you have read, Netflix has received much praise (and some criticism alike) for its approach to company culture, talent management, and HR issues.

A federal district court in California denies class certification to a nationwide putative TCPA class of consumers against a debt collector who allegedly made more than 500 million prohibited calls

The United States District Court for the Southern District of California recently issued an order denying class certification to a nationwide putative class of consumers against The CBE Group, Inc. (“CBE”), which alleged that CBE made over 500 million calls to these consumers’ cell phones without their prior express consent in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”).  Blair, et al. v. The CBE Group, Inc., No. 3:13-cv-00134-MMA-WVG (S.D. Cal. August 26, 2015).

The NLRB Redefines the Standard for Joint Employer Status

On August 27, 2015, the National Labor Relations Board (the “Board”) issued its opinion in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, and FRP-II, LLC d/b/a Leadpoint Business Services, and Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, 362 NLRB No. 186 (August 27, 2015), which overturned longstanding precedent regarding the standard for determining if a joint employer relationship exists.  

The Sixth Circuit sheds light on meaning of “prior express consent” under the TCPA in a case involving hundreds of calls to a debtor’s cellphone by a creditor using an autodialer

One thing that telemarketers and other companies that communicate with their customers by calling their customer’s cellphones crave is clarity under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227.  The Sixth Circuit recently shed some light on the meaning of “prior express consent” under the TCPA in connection with calls by a creditor to its debtor’s cellphone in the case of Hill v. Homeward Residential, Inc., No. 14-4168 (6th Cir. August 21, 2015).

The Eleventh Circuit rules that Capital One is not a debt collector under the FDCPA with respect to defaulted credit card debt it acquired from HSBC

In the case of Davidson v. Capital One Bank (USA), N.A., No. 14-14200 (August 21, 2015), the Eleventh Circuit had occasion to decide whether a bank that collects on defaulted debt it acquired from another bank is a “debt collector” under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p.

Manufacturer’s Corner: Conflict Mineral Reporting Requirement Still Illegal

On August 18, 2015, the D.C. Circuit Court of Appeals, sitting en banc, upheld its prior order striking a portion of the SEC’s conflict mineral rule.

The DOL Announces Guidance on Wage and Hour Misclassification – Employees vs Independent Contractors

The Department of Labor recently released new guidance (Administrator’s Interpretation No. 2015-1) on how it will decide whether a worker is properly classified as an employee or an independent contractor. Although the factors discussed in the Administrator’s Interpretation are not new, the DOL’s broad reading of the term “employee” under the Fair Labor Standards Act and the heightened focus on the “economic realities” of the business relationship between the worker and the purported employer indicate that wage and hour misclassification will be an enforcement priority for the DOL going forward.

The EEOC Weighs In on Sexual Orientation and Title VII

On July 16, 2015, the Equal Employment Opportunity Commission (“EEOC”) issued a 3-2 decision finding that under Title VII, sex discrimination includes actions based on sexual orientation. The decision involved an appeal from a Federal Aviation Administration (“FAA”) dismissal of a sexual orientation discrimination complaint. The issue before the EEOC was whether a complaint alleging discrimination based on sexual orientation in violation of Title VII lies within the EEOC’s jurisdiction. Apparently buoyed by the U.S. Supreme Court’s recent decision on same sex marriage, the EEOC unequivocally answered that question with a resounding “Yes.”

Have you revised your Reg E disclosures to take advantage of the recent changes in Kansas Law?

Effective July 1, 2015, a Kansas bank can reduce its liability for fraudulent electronic fund transfers on a consumer account by revising its Reg E disclosures.

Certain Mid-Sized Employers May Have Even MORE Time to Comply with the ACA’s Play-or-Pay Rules

Thanks to a special transition rule, employers with 50 to 99 full-time employees (including full-time equivalents) are generally shielded from the Affordable Care Act’s “play-or-pay” penalties until January 1, 2016. Moreover, in a wrinkle that is easily overlooked, any such “mid-sized” employer that already sponsors a health plan operating on a non-calendar-year basis has even more time to comply with these rules.

Manufacturer’s Corner: The Danger of Conditioning Your Sale on the Buyer’s Acceptance of Your Terms

If you review the terms and conditions given by many manufacturers in their invoices (including, probably, yours), you likely will find a provision that says something to the effect of “we agree to sell you this product if, and only if, you agree to each of these terms and conditions.”  It’s a common term, and there’s a good reason for it: it can counteract standard form language in the buyer’s purchase order that you don’t like.

Using Alack’s “Magic Word” in Exculpatory Contract Provisions

There is almost never such a thing as a magic word anymore.  In medieval England, people would recite things three times to get magical protection (“third time’s the charm”).  Similarly, in the earliest days of the law, parties would write contracts “under seal” that protected them, regardless of whether the contract was otherwise valid.  That is what a magic word does; it protects you just by being there.  Today, the law hates magic words; courts constantly dig into the hidden meaning behind material terms and the intent and understanding of the parties who use them.  Because there is almost never such a thing as a magic word these days, when one does occur business owners would do well to take note.

Supreme Court Upholds Limit On Royalties To Life Of Patent, But Other Strategies Exist To Extend Life Of Compensation

A patent issued under the U.S. Patent Laws has a finite life, which is 20 years from the date of filing.  A strategy to monetize a patent through licensing must take into consideration that finite life span because after the 20 year patent term, the underlying invention falls into the public domain.  A patent holder may not continue to receive license royalties after the patent’s expiration, as long ago decided by the U.S. Supreme Court in Brulotte v. Thys Co., 379 U. S. 29 (1964).

EPA’s Air Rules Must Consider Costs, Says U.S. Supreme Court

On June 29, 2015, the United States Supreme Court announced its decision in Michigan v. Environmental Protection Agency, holding that EPA unreasonably interpreted a provision of the Clean Air Act regarding the regulation of power plants under the EPA’s Mercury and Air Toxics Standard (MATS) (also referred to as the Utility MACT).

White Collars May Turn Blue: Prepare for New Rules on Overtime Eligibility

Responding to a call by President Obama last year, the U.S. Department of Labor this week issued a proposal to update the regulations governing which employees qualify for the “white collar” exemptions to federal minimum wage and overtime pay requirements. Currently those exemptions – for executive, administrative and professional employees – require the workers to meet job duties-related tests and receive a salary of at least $455 per week, or $23,660 annually. Certain computer and outside sales employees are also exempted.

Same-Sex Marriage Ruling Impacts Benefit Plans (Again)

On Friday, June 26, 2015, the Supreme Court published its ruling in Obergefell v. Hodges, holding (by a 5 to 4 margin) that the Fourteenth Amendment requires a state to license marriages between two people of the same sex, and to recognize any such marriage that is lawfully licensed and performed out-of-state. As a result, all (remaining) state laws or constitutional amendments banning same-sex marriage are now invalid.

Manufacturer’s Corner: Breach of Warranty Claims and CGL Coverage

A court recently held that a CGL insurer owed a duty to defend its insured accused of breaching express and implied warranties.

Supreme Court Upholds Affordable Care Act Subsidies

The Supreme Court announced today that it has upheld Affordable Care Act (“ACA”) subsidies for insurance purchased on federally-facilitated exchanges. By a 6 to 3 vote, the Court concluded that the statute allows for subsidies on any exchange created under the ACA. The decision in King v. Burwell may come as a disappointment to some who hoped that the subsidies would be struck down and that the entire ACA would unravel in the aftermath.

The Supreme Court Enters Decision in King v. Burwell

This morning, the U.S. Supreme Court entered the much anticipated decision in King v. Burwell.  In a 6-3 decision, the Supreme Court held that the subsidies “are available to individuals in States that have a Federal Exchange.”

EPA Issues Final Vapor Intrusion Guidance and Declares EPA, not OSHA, in Charge of Indoor Air Quality at the Workplace

At long last, after operating under the draft Vapor Intrusion Guidance of 2002 for almost 13 years, EPA finally issued final vapor intrusion guidances on June 11, 2015, a specific guidance for petroleum vapor intrusion at leaking underground storage tank sites, and a more general technical guide for assessing and mitigating the vapor intrusion pathway at chlorinated solvent sites. (Technical Guide). In response to criticism that EPA did not subject the guidances to the public scrutiny of the administrative rule-making process, EPA allowed for a longer public comment period than is customary for guidances. Additionally, both vapor intrusion guidances were the subject of extensive discussions between EPA, various sister agencies, private industry, environmentalists, and the White House.

Fano Authors ‘Tips to Avoid Discrimination Lawsuits’ in Bloomberg BNA

Spencer Fane Partner Ron Fano recently authored an article in the June 12th edition of Bloomberg BNA’s Corporate Law & Accountability Report this past week, offering advice on the prevention of discrimination lawsuits, which can be both costly and damaging to a company’s reputation.

Manufacturer’s Corner: Manufacturer Gets Second Chance Following Unsuccessful Litigation With Supplier

This is a story about a U.S. manufacturer who got into a dispute with its Chinese supplier. 

Clarity for Colorado Employers: Colorado Supreme Court Decides that Marijuana Use is Not a “Lawful” Off-Duty Activity in Colorado

The Colorado Supreme Court has now heard and decided a case (Coats v. Dish Network) critical to Colorado employers in terms of whether the legalization of marijuana in Colorado mandates an exception to zero tolerance drug policies. The Court decided in favor of the employer, ruling that marijuana use, at least for medicinal purposes, is not a lawful off-duty activity for purposes of receiving protection under Colorado’s lawful activities statute even though state law has legalized the use of marijuana for medicinal and recreational purposes. As a result, employers may continue to maintain and enforce zero tolerance policies that include marijuana within their scope.

Home Builder’s Stormwater Violations at Construction Sites Result in $1 Million Enforcement Settlement

A residential home builder, Garden Homes, has agreed to resolve alleged stormwater violations with the EPA and U.S. Department of Justice, according to a June 8, 2015, Federal Register Notice. The settlement involves a civil penalty of $225,000 and a Supplemental Environmental Project valued at $780,000 involving the acquisition of 108 acres of land for preservation.

Warehouse and Distribution Center Fined $3 Million for Anhydrous Ammonia Releases from its Industrial Refrigeration System

On June 2, 2015, the U.S. EPA and DOJ announced a $3 million dollar settlement with Millard Refrigerated Services, a company specializing in refrigeration and distribution services to retail, food service, and food distribution companies. The settlement resolves alleged violations of the EPA’s Risk Management Program, the Clean Air Act’s General Duty Clause, and CERCLA and EPCRA release reporting requirements stemming from three releases of the industrial refrigerant anhydrous ammonia from the facility’s Mobile Marine Terminal in Alabama. Among the release incidents was an August 2010 release involving hospitalization and medical treatment of individuals who were offsite working on decontaminating ships in response to the 2010 oil spill in the Gulf of Mexico.

Kansas City Passes Ordinance Requiring Building Owners to Disclose Energy and Water Usage

On June 4, 2015, by a 12-1 vote, the City Council of Kansas City, Missouri, passed the Energy Empowerment Ordinance (No. 150299) that will require building owners to disclose energy and water usage.

Western District of Missouri Bankruptcy Court Finds No FDCPA Violation for Proof of Claim Filed on Time-Barred Debt

Recently, several courts across the country have considered whether filing a proof of claim on debt that is barred by the statute of limitations violates the Fair Debt Collection Practices Act (“FDCPA”). The increased attention on this issue was sparked by the Eleventh Circuit’s decision in Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014). The Eleventh Circuit held that filing a proof of claim on debt that is barred by the applicable statute of limitations violates the FDCPA. After the Eleventh Circuit’s decision, many other courts have decided the issue, and the results of these cases have been mixed. Last week, the Bankruptcy Court for the Western District of Missouri weighed in, and it found that there was no violation of the FDCPA. Dunaway v. LVNV Funding, LLC, No. 14-04132-drd, Adv. No. 14-4132, Doc. 29 (Bankr. W.D. Mo. May 19, 2015).

“Practically Speaking” the OIG Releases Compliance Guidance for Health Care Boards

A little over a month ago the Office of Inspector General, U.S. Department of Health and Human Services (“OIG”), in collaboration with a number of other independent health care organizations, issued what it deemed to be “practical guidance for health care governing boards on compliance oversight.” This document is intended to assist governing boards in carrying out their compliance program oversight function under the applicable health care laws, rules and regulations.

Application of Equal Credit Opportunity Act’s Notice Provisions to Delinquent Borrowers

A California court recently found that delinquent borrowers may bring a claim under the Equal Credit Opportunity Act (“ECOA”) when a lender does not respond to an application for a loan modification within thirty days. MacDonald v. Wells Fargo Bank, N.A., No. 14-cv-04970 (N.D. Cal. Apr. 24, 2015).

New Rule Issued by EPA and the Army Corps of Engineers Expands Federal Jurisdiction over Waters and Wetlands

On May 27, 2015, EPA and the Corps of Engineers released a final rule that expands federal jurisdiction under the Clean Water Act. The rule expands on existing law by asserting jurisdiction by rule over all tributaries to traditional navigable waters, without regard to the quantity or timing of flow.  Tributaries are defined in the rule as “waters that are characterized by the presence of physical indicators of flow – bed and banks and ordinary high water marks – and that contribute flow directly or indirectly to a traditional navigable water, an interstate water, or the territorial seas”.

Manufacturer’s Corner: FTC Announces Nothing

In 2011, the FTC requested public comment regarding its interpretations, rules, and guides issued under the Magnuson-Moss Warranty Act.  After four years of hard work, the FTC today issued a press release headlined “FTC Will Keep Consumer Product Warranty Rules in Current Form with Some Modifications.”

EEOC Begins Roll-Out of Digital Charge System. Going Forward, Administrative Filings Submitted Through Online Web Portal.

The EEOC recently announced that it will begin communicating with employers through an online Digital Charge System rather than regular mail and e-mail. The EEOC receives roughly 90,000 charges of discrimination per year. The proposed purpose of the “ACT Digital” pilot program is to ease the administrative burden of handling those charges and to reduce the use of paper submissions and files.

Can a Rule 68 offer of judgment that offers complete relief to the named plaintiff in a putative class action moot the entire case? While federal courts continue to reach different conclusions, the Supreme Court may finally weigh in

One tactic often used with varying degrees of success to thwart putative class actions brought under various federal statutes is to file an early offer of judgment under Rule 68 that provides the named plaintiff or plaintiffs complete relief in an effort to moot the putative class claims at the inception of a class case.

It’s Unanimous: The Fiduciary Duty to Monitor Has Teeth

The United States Supreme Court gave considerable comfort to defined contribution plan participants – and their lawyers – who sue plan fiduciaries for failing to keep track of plan investment options. In a unanimous decision handed down on May 18, 2015, the Court held in Tibble v. Edison International that ERISA fiduciaries have a “continuing duty” to monitor investment options, and that plan participants have six years from the date of an alleged violation of that duty to file a lawsuit against the plan’s fiduciaries. This ruling significantly undercuts the utility of a statute of limitations defense that had been successfully deployed by plan fiduciaries in previous cases, and creates fertile ground for more litigation.

Missouri LIHTC Update: MHDC Weighs Domestic Violence and LIHTC Concentration Proposals

Recently, Missouri Treasurer Clint Zweifel urged the MHDC to use its LIHTC allocation to help combat affordable housing issues that are exacerbated among victims of domestic violence.

Manufacturer’s Corner: Eighth Circuit Offers Expansive View of Economic Loss Doctrine

If you regularly read this column, you know that one of the things we spend a lot of time discussing is working appropriate protections into your contracts.  Plaintiffs’ attorneys understand that, and often try to work around those protections by restyling breach of contract or breach of warranty actions as tort claims – that is, claims for negligence or fraud or the like.

Courts May Review EEOC Conciliation Efforts, According to Supreme Court

In an employer friendly decision, last week the U.S. Supreme Court ruled unanimously that courts may review whether the Equal Employment Opportunity Commission (EEOC) has satisfied its duty to attempt pre-suit conciliation.

Snail Mail: A whale of a fail that will make your borrowers bail, your lending business flail, and leave you on the rail.

With the upcoming regulatory changes going into effect on August 1st, it is more important than ever for mortgage lenders and title companies to have an electronic disclosure system to handle the disclosure requirements promulgated by the new regulations.

What does it mean to be an “Additional Insured?”

The answer lies in the details of the underlying contract and the details of the underlying insurance policy. Today more and more companies are focusing on risk transfer mechanisms within the contracts they have with their vendors, suppliers, contractors and sub-contractors.

Think You Can Avoid RESPA by focusing on construction and land loans? Think again, August 1st is coming!

The Real Estate Settlement Procedures Act (“RESPA,” implemented by Regulation X) and the Truth-In-Lending Act (“TILA,” implemented by Regulation Z) have long been a bane for mortgage lenders as they attempt to interpret the statutes associated with each law and apply them to real-world lending.

Manufacturer’s Corner: Warranties of Future Performance

File this one under “does your warranty really say what you think it says?”

A federal district in Pennsylvania dismisses a putative FDCPA class action based on the filing a proof a claim on a time-barred debt in a Chapter 13 bankruptcy

I recently wrote about a decision from a federal district court in Alabama that sidestepped the Eleventh Circuit’s Crawford decision by finding that the Bankruptcy Code (the “Code”) and the Fair Debt Collection Practices Act (“FDCPA”) were in irreconcilable conflict, and the FDCPA gave way to the Code on the question of whether the mere act of filing a proof of claim on a stale debt in a Chapter 13 bankruptcy violated the FDCPA.

Fracking Claims Get Their Day in Court as Lone Pine Orders Axed in Colorado

Lone Pine orders have become an increasingly common case management tool employed by trial courts to help streamline proceedings for defendants and the court while maintaining equity for the plaintiffs. Lone Pine orders are most often used in cases involving complex issues and multiple plaintiffs, but are becoming more widely employed in a greater variety of cases.

EEOC Proposes ADA Rules on Wellness Program Incentives

The EEOC has issued proposed regulations providing guidance on the extent to which the ADA permits employers to offer incentives to employees to promote participation in wellness programs that are employee health programs. The new guidance is similar, but not identical, to the rules governing incentives for health-contingent wellness programs under HIPAA. Employers should review their wellness programs to ensure compliance with both laws.

Manufacturer’s Corner: The “Ambush Election” Rule Is In Effect

Beware union organizers loitering around your premises!

Want immediate judicial review of a Corps of Engineers’ wetlands jurisdictional determination? Pick a property within the Eighth Circuit (Minnesota, Iowa, Missouri, Arkansas, North Dakota, South Dakota and Nebraska)

On April 10, 2015, the U.S. Court of Appeals for the Eighth Circuit gave a northwestern Minnesota peat mining operation something the company wanted very much — judicial review of a wetlands jurisdictional decision issued by the U.S. Army Corps of Engineers. Hawkes Co., Inc., et. al v. U.S. Army Corps of Engineers, slip op. No. 13-3067 (8th Cir. April 10, 2015). In so doing, the Eighth Circuit built on the U.S. Supreme Court’s decision in Sackett v. EPA, 132 S. Ct. 1367 (2012), which had made Clean Water Act administrative orders subject to court scrutiny, and continued the Eighth Circuit’s focus on curtailing what it sees as government agency overreaching, as recently expressed in Iowa League of Cities v. EPA, 711 F.3d 844, 868 (8th Cir. 2013).

Labor and Employment in Nebraska – A Guide to Employment Laws, Regulations, and Practices (Matthew Bender)

Josh Dickinson and Brian Peterson, authors of treatise concerning Nebraska law on labor and employment.

New Rule Accelerating Union Organizing Takes Effect April 14th

A new NLRB rule, known by pro-business critics as the “ambush election rule,” takes effect on Tuesday, April 14th. The rule makes it easier for unions to organize unrepresented employees through a dramatically shorter time period between the union’s filing of a representation petition and the election. Congress passed a resolution to block the rule in March, but in another victory for labor organizations, President Obama vetoed the Congressional measure.

Missouri is Utilizing Historic Tax Credits to Revitalize Downtown Kansas City

Over the last fifteen years, you may have observed significant construction and rehabilitation of commercial and residential real estate in downtown Kansas City. To finance many of these projects, developers utilize both Federal and Missouri Historic Tax Credits (HTCs).

EPA Revises its Supplemental Environmental Project – SEP Policy

On March 10, 2015, EPA issued a new revised 2015 Update to its Supplemental Environmental Project (SEP) Policy, thereby superseding prior SEP policies.

IRS Eases Correction Rules for Missed Elective Deferrals

The IRS has just given sponsors of 401(k) and 403(b) plans a number of additional options for correcting a failure to honor an employee’s election to defer a portion of his or her pay. These new options, as announced in Revenue Procedure 2015-28, will be particularly helpful to sponsors of plans that provide for automatic enrollment (including those with an automatic escalation feature).

Federal Judge in California brings down the curtain on a FCRA class action against Paramount Pictures

Class actions alleging technical violations of the Fair Credit Reporting Act (FCRA) against employers who obtain consumer reports on job applicants are all the rage, generating large settlements and headlines (at least in legal circles).

IRS to Plan Sponsors: You Must Retain Documentation for Loans and Hardship Withdrawals

Most sponsors of defined contribution plans rely on a third-party administrator (a “TPA”) to handle participant loans and hardship withdrawals—typically through the TPA’s website. However, in guidance issued last week, the IRS cautions that the sponsor—not the TPA or the participant—is responsible for maintaining documents proving that those transactions comply with the law.

Promoting LIHTC Allocation Beyond Traditional Low-Income Areas: MHDC Proposal and Supreme Court Case Potentially at Odds

While the Missouri Housing Development Commission (“MHDC”) considers a proposal to encourage LIHTC allocations away from areas with high concentrations of low-income housing, the Supreme Court of the United States is considering depriving plaintiffs an important tool used for enforcement of the Fair Housing Act—which may have the effect of discouraging allocating agencies from diminishing high concentrations of low-income housing.

Manufacturer’s Corner: Warranty Disclaimers By Intermediate Sellers

If you’re like many manufacturers, you have no dealings with the end user of your product.  Rather, you sell to a distributor or other intermediate seller, who then sells your product to the end user.  We have previously discussed disclaiming your implied warranties against your intermediate buyer and whether that disclaimer travels “downstream” to the end user, but we haven’t addressed whether a disclaimer made by the intermediary can protect you in a suit by the end user if, say, you failed to disclaim your implied warranties yourself or if for some reason they are not effective against the end user.

The bona fide error defense to FDCPA claims is alive and well in the Eleventh Circuit

In the case of Isaac, et al. v. RMB, Inc., et al., No. 14-11560 (11th Cir. March 17, 2015), the Eleventh Circuit recently upheld summary judgment in favor of a debt collector based on the affirmative defense of bona fide error.  The case presents a good opportunity to see what type of evidence is needed to prevail on the defense.

Another Court Enforces DOL’s Electronic SPD Rules

At some point, as electronic communication becomes the norm – and as paper virtually disappears from the workplace – we will surely see a softening of the conditions imposed by the Department of Labor (“DOL”) on the electronic distribution of summary plan descriptions (“SPDs”). But a recent decision by a New York federal court confirms that we are not yet at that point.

Young v. UPS – An Important Case on Pregnancy Discrimination

On March 25, 2015 the United States Supreme Court issued its opinion in Young v. United States Parcel Service. This is an important case because it clarifies what constitutes unlawful discrimination under the Pregnancy Discrimination Act (“PDA”). Employers should carefully review this case and ensure that they are not inadvertently discriminating against pregnant employees by refusing to accommodate their temporary physical restrictions.

Proceeds from Insurance Settlement Outside the Scope of Article 9

The Bankruptcy Appellate Panel for the First Circuit recently held that a creditor holding a perfected security interest in accounts and payment intangibles did not have a perfected security interest in the proceeds of an insurance settlement.

Manufacturer’s Corner: The Interplay Between Limited Remedies and Damages Limitations

I previously have urged you to limit the remedies available under your express warranty (e.g. to repair or replacement), and to disclaim liability for incidental and consequential damages.  Here, we’ll discuss a common argument made by people who want to render your efforts meaningless.

Supreme Court Issues Opinion on TILA Rescission Rights

We previously provided an update on developments concerning the right of rescission granted under the Truth in Lending Act (“TILA”). The United States Supreme Court recently issued a consumer-friendly decision regarding the rescission process.

Pat Whalen Publishes Data Breach Notification Article in BankNews

Spencer Fane Chairman Pat Whalen was featured as a guest author in this month’s issue of BankNews magazine providing insights and updates on the protocol for handling data breach notifications. The article, titled “When to Send a Data Breach Notification,” discusses the laws surrounding security breaches and the responsibility of companies to determine when notification of customers is both necessary and required by law.

Top 10 Things You Need to Know About Phase I Environmental Site Assessments

In a recent Midwest Real Estate News guest column, Spencer Fane Partner Andrew Brought shared his knowledge and insight on Phase I Environmental Site Assessments (ESAs) with readers. The article outlines the role and common misconceptions of environmental site assessments in property transactions and provides 10 important facts on ESAs as well as their impact on buyers and sellers involved in real estate transactions.

A federal district court sidesteps Crawford in dismissing claim for FDCPA violation based on filing a proof of claim on a time-barred debt in a Chapter 13 bankruptcy

In a 2014 decision rued by debt collectors everywhere, the Eleventh Circuit in Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014) ruled that filing a proof of claim to collect a time-barred debt in a Chapter 13 bankruptcy violated the Fair Debt Collection Practices Act

Policy Update: FMLA Rights Extended to Same-Sex Spouses

The U.S. Department of Labor’s (DOL) new rule broadening the definition “spouse” under the Family and Medical Leave Act (FMLA) to provide legally married same-sex couples the same rights under the law as married opposite-sex couples becomes effective on March 27, 2015.

Davidson v. Henkel: A Rather Taxing Decision

A recent decision by a Michigan federal trial court serves as a warning to employers that their failure to shield participants in nonqualified deferred compensation plans from adverse tax consequences may subject the employers to unanticipated liability. Although this decision (in Davidson v. Henkel Corporation) involved FICA taxation, the court’s reasoning would seem to apply equally to the 20% penalty tax and interest assessments triggered by a violation of Code Section 409A.

Manufacturer’s Corner: Just What Is the “Ordinary Use” for a Product Anyway?

For this installment, we turn to an aspect of the implied warranty of merchantability that has not gotten its fair share of attention here: what is “the ordinary purpose” for which your product is used?  It seems like a simple question, but it can be deceptively tricky.

Supreme Court Makes It Easier for Administrative Agencies to Change “Interpretive Rules”

Last week, the Supreme Court of the United States held that Interpretive Rules issued by administrative agencies do not have to undergo the notice-and-comment rulemaking procedures of the Administrative Procedure Act (“APA”) even if they contradict or substantially change previously issued Interpretive Rules. Perez v. Mortgage Bankers Association, et al., —S.Ct.—, 2015 WL 998535 (Mar. 9, 2015). Specifically, the Court held that the Department of Labor was allowed to change its position on whether mortgage-loan officers were exempt from the overtime provisions of the FLSA even though (1) it did not follow the APA’s notice-and-comment rules prior to changing its position and (2) it had taken the exact opposite position just four year earlier.

Manufacturer’s Corner: Merchants, Battles of the Forms, and Forum-Selection Clauses

If you read this column with any regularity, it will not surprise you that I was thrilled to read this introduction to a recent court opinion: “The motions to dismiss in this case present a difficult legal issue, as if a civil procedure professor and a Uniform Commercial Code professor conspired on a law school exam question[.]”

Anthem Security Breach May Require Plan Sponsor Action

The well-publicized cyber-attack on Anthem, Inc.’s information technology system may require employers to take prompt action to protect the rights of their health plan participants. Although neither the scope nor the cause of the security breach has yet been determined, the attack has been described as both “massive” and “sophisticated.”

No Missouri Use Tax Due When Aircraft is Purchased for Immediate Lease to a Missouri Common Carrier

In its recent ruling in Five Delta Alpha, LLC v. Director of Revenue, the Missouri Supreme Court has ruled that an aircraft transfer is exempt from Missouri use tax under the “sale or resale” exemption even when the aircraft is leased rather than sold to a Missouri common carrier.

CFPB Proposes Changes to Increase Mortgage Lending in Rural Markets

The Consumer Financial Protection Bureau recently proposed amendments to regulations that would broaden the definition of “small creditor” in an attempt to increase mortgage lending to rural and underserved markets. Currently, small creditors are able to make loans with slightly less restriction than larger creditors. The proposed changes would make this exemption available to a greater number of creditors.

Potential Liability for Quoting LIBOR Rates

In drafting loan documents, banks frequently cite to an index rate as the source of the interest rate governing a particular loan. One of the most commonly cited rates is LIBOR.

Next Generation Compliance—EPA Strategy to Delegate Enforcement to Third Parties?

In a recent January 2015 Memorandum to EPA’s Regional Enforcement Managers from Cynthia Giles, EPA Assistant Administrator for Enforcement, EPA is touting its Next Generation Compliance strategy as “an integrated strategy” intended to “bring together the best thinking from inside and outside EPA.” 

IRS Grants Limited Transition Relief to Small-Employer Premium Reimbursement Arrangements

In a series of notices and FAQs, the IRS has clearly enunciated its view that an employer’s reimbursement of an employee’s premiums for individual health insurance violates certain provisions of the Affordable Care Act (“ACA”). While reiterating this key point, Notice 2015-17 does grant a limited period of relief for smaller employers. Nonetheless, even those employers should be working toward a June 30 deadline to comply with these ACA constraints.

Illinois court rules that engineering firm that prepared and recorded plat for new subdivision is not entitled to a mechanic’s lien

An Illinois appellate court recently had an opportunity to decide whether an engineering firm hired to plat undeveloped land for a new subdivision was entitled to file and enforce a mechanic’s lien after the firm was not paid in full for its work.

Manufacturer’s Corner: The West Coast Port Labor Dispute and You

Manufacturer’s Corner. So, there’s a big shipping backlog forming out west while port owners and the longshoremen work a few things out.  How’s that affecting your supply contracts?

Home mortgage lenders hire law firm to send 88,937 collection letters to defaulted borrowers: Borrowers allege this violated the FDCPA and a federal judge certifies the class

In Lori Jo Vincent, et al. v. The Money Store, Inc. et al, No. 03 cv 2876 (S.D.N.Y.  February 2, 2015), the United States District Court for the Southern District of New York certified a class of home mortgage borrowers who defaulted on their loans and received uniform “breach letters” from a law firm sent on behalf of the defendant mortgage servicing company and the defendant lenders. 

“Home Care Rule” Called Into Doubt by Federal Courts

A recent district court opinion invalidated the Department of Labor–Wage and Hour Division’s “Home Care Rule,” a regulation slated to become effective this year that would alter the scope of an exemption from the Fair Labor Standards Act’s (“FLSA”) minimum wage and overtime provisions. Health care employers that provide in-home care or in-home medical services to individual customers should watch this case closely. Whether the Home Care Rule is valid and enforceable will have major implications for the viability of many home care businesses.

New NLRB “Quickie” Election Rules – To Become Effective April 14, 2015

In December of 2014, the National Labor Relations Board (“NLRB”) issued new regulations that govern how union representation elections will be conducted. The new rules are set to become effective on April 14, 2015.  Although the U.S. Chamber of Commerce and business groups are challenging the new regulations, Employers should pay careful attention to the new rules because the rules will  require Employers to act much more quickly and to be proactive when responding to a union organizing campaign and subsequent election. This blog post highlights key aspects of the new rules.

Alter Ego and Joint Venture Theories Permitted Under Montreal Convention

The Montreal Convention provides that carriers are liable for damages when a passenger is injured or killed on an international flight. When a carrier lacks the assets to cover these damages, however, claimants may have no recourse unless liability under the Convention may be applied against other parties. A recent ruling by the U.S. District Court for the Southern District of Florida has endorsed a theory for expanded liability in a noteworthy decision.

IRS Now Accepting “Cycle E” Determination-Letter Applications

The IRS is now accepting applications for updated determination letters on behalf of individually designed retirement plans falling within “Cycle E” of the determination-letter program. These include plans sponsored by employers having either a “5” or “0” as the last digit of their employer identification number, as well as governmental plans that elected not to file during Cycle C.

Manufacturer’s Corner: Disclaiming Implied Warranties to Remote Purchasers

As I’ve noted before in these columns, an implied warranty disclaimer is an essential part of your terms and conditions.  But giving an effective disclaimer is sometimes easier said than done, especially when you do not sell your product directly to the end user, but rather through a wholesaler, retailer, or other intermediary.

Manufacturer’s Corner: President Proposes New Federal Data Breach Notification Law

Shortly before issuing his State of the Union address, President Obama released a proposed federal law mandating notification to individuals whose personal information is compromised in certain data breaches.  Not long ago, I wouldn’t have written about this issue in a Manufacturer’s Corner column, but since I recently decided that the Internet of Things will expose manufacturers to litigation over data privacy, it seems appropriate.

A Sham, a Waste? EPA’s New Recycling and Hazardous Waste Rules Finalized

Last week, on January 13, 2015, EPA issued its new “Definition of Solid Waste” Final Rule in the Federal Register at 80 Fed. Reg. 1694. This new rulemaking will have significant impacts regarding how secondary hazardous materials are recycled and exempted from the hazardous waste regulations. Unless challenged (and by all accounts it appears at least certain aspects may be litigated based on initial comments by various industrial sectors) the rule becomes effective on July 13, 2015, where EPA is the authorized implementing agency (Iowa, Alaska, American Samoa, and Puerto Rico and the U.S. Virgin Islands). Because RCRA is a federally delegated program, other states will have to adopt the more stringent aspects of the rule discussed below.

Unfair Competition: Righting Wrongs

If you’re in business, chances are you’ve experienced unfair marketing tactics by one or more of your competitors. Such tactics may include false or misleading advertising or representations concerning the nature or quality of the competitor’s products or services. Or, they may consist of false or misleading statements about what you sell.
You need not stand by while your competition engages in such underhanded tactics.

Is a communication between a debt collector and a credit reporting agency a communication “in connection with the collection of any debt” for purposes of the FDCPA?

In a case in which the Eighth Circuit found against a debtor on her claim against a collection agency based on the FDCPA, the court nevertheless adopted a standard followed by other circuits in defining when a communication is “…in connection with the collection of any debt” for purposes of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seqSarah McIvor v. Credit Control Services, Inc., No. 14-1164 (December 4, 2014).

The Sixth Circuit rules that making an offer to settle a valid but time-barred debt may give rise to an FDCPA violation.

In a case that will likely cause debt collectors seeking to collect time-barred obligations grave concern, the Sixth Circuit recently ruled that making an offer to settle a time-barred debt at a discount could mislead an unsophisticated consumer to believe the debt could be enforced in court in violation of the Fair Debt Collection Practices Act.  Buchanan v. Northland Group, Inc., No. 13-2523 (January 13, 2015).

Manufacturer’s Corner: New Law Exempts Non-Financial End Users From Margin Requirements For Uncleared Swaps

Here is good news for a certain subset of Manufacturer’s Corner readers.

Commercial Receivership Bill Introduced to Missouri Senate

On January 12, 2015, the Missouri Commercial Receivership Act was introduced to the Missouri Senate as SB 216.

Manufacturer’s Corner: A Word on Consumer Class Actions

This is not a litigation column, but I’m a trial attorney, so litigation is always on my mind.  I’ve been hearing a lot of chatter lately about consumer class actions.  Specifically: what must a putative consumer class do to show that the class members are ascertainable – that is, that the court and the lawyers and the class members can figure out who is in the class and who is not.

Updated Proposed Federal 30-day “Shot Clock” For Data Breach Notification

As we wrote yesterday, President Obama has called for legislation (the Personal Data Protection and Privacy Act) that will require notice of a data breach within 30 days of discovery by your company.

Proposed Federal 30-day “Shot Clock” For Data Breach Notification

In November we discussed the standards in place for whether and when a consumer must be notified of a data breach. The current answer is that almost all states have laws requiring notification, but the format and timing of the notification vary from state to state.

Manufacturer’s Corner: Don’t Fall For Your Own “No Oral Modification” Clause

Here’s a thing that probably appears in your standard terms and conditions: “This agreement cannot be modified or rescinded, except in writing signed by an authorized agent of [your company].”  You can go ahead and check.  It’s probably down toward the bottom, above the miscellaneous provisions like choice of law.

Court Rejects Claim That Fractional-Share Owner Holds An Interest In Operator’s Entire Fleet

The bankruptcy of fractional-share operator Avantair triggered a dispute regarding exactly what property its fractional-share owners held. Like other fractional-share operators, Avantair operated a fleet of airplanes, selling fractional shares in each of them to individual participants.

Contract Language Calling For Sale “As Is” Prevails Over Airworthiness Provision When Prepurchase Inspection Fails To Note Condition Compromising Airworthiness

The aircraft buyer in McMahan Jets, LLC v. Roadlink Transportation, Inc. discovered that a contract term calling for delivery of the aircraft “in airworthy condition” was not sufficient to protect it from aircraft discrepancies found after the buyer’s prepurchase inspection and acceptance of the aircraft.

Banks: The Forgotten Victim of a Data Breach

Data breaches have become a phenomenon of late—with news seemingly breaking everyday on the latest victim and the potential harm to consumers. Often overlooked, however, is the impact that each new data breach has on banks.

New OSHA Reporting and Recordkeeping Rules Take Effect

On January 1, 2015, new OSHA regulations took effect that broaden the scope of work-related injuries that employers must now report to OSHA.

Don’t Forget About HIPAA When Addressing Data Security

Among the many data security and breach laws that exist, covered health care providers and health plans must also contend with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

No Good Deed…: Allowing Part-Time Employees to Make Health FSA Contributions May Trigger ACA Penalties

When it comes to health coverage, many employers draw a distinction between full-time and part-time employees. To be eligible to enroll in the employer’s health plan, an employee must work a minimum number of hours per pay period. But many of those same employers then allow even part-time employees to contribute to a health flexible spending account (“health FSA”). After all, doing so costs the employer nothing (and even saves a modest amount in employment taxes), and why not at least give those employees an opportunity to pay some of their medical expenses on a pre-tax basis? Unfortunately, this paternalistic approach may now subject an employer to substantial daily penalties under the Affordable Care Act (“ACA”).

Manufacturer’s Corner: The Importance of Notice Provisions

An easily-overlooked portion of a contract for the sale of goods is the one that addresses what notice the buyer must give the seller in the event the goods do not conform to contract specifications or warranties.  These provisions warrant your close attention, however, because they can be outcome-determinative in the event of litigation over the alleged non-conformity.

New OSHA Reporting Rules to Become Effective Jan. 1, 2015

The Occupational Safety and Health Administration (OSHA) will celebrate 2015 by implementing new regulations relating to an employer’s duty to report work-related fatalities, injuries, and illnesses. The new regulations go into effect on January 1, 2015 for all workplaces that fall under federal OSHA jurisdiction.

Rip Van Winkle Awakens! – The NLRB Overturns Register-Guard

In their dissent to the National Labor Relations Board’s Register-Guard decision, Board Members Liebman and Walsh classically stated that “the NLRB has become the ‘Rip Van Winkle of administrative agencies. Only a Board that has been asleep for the past 20 years could . . . contend, as the majority does, that an e-mail system is a piece of communications equipment to be treated just as the law treats bulletin boards, telephones, and pieces of scrap paper.” See 351 NLRB 1110, 1121 (2007). After a seven year slumber, the Board has awoken and is attempting to get with the times. See Purple Commc’ns, Inc., 361 NLRB No. 126 (2014). A 3-2 majority of the Board adopted the logic of Liebman and Walsh’s dissent and overruled what many believed to be a canonical case on the balance between employees’ Section 7 rights and employers’ property rights.

Changing laws keep Missouri business on its toes

Psychologist William Frederick Book wrote a person should learn to adjust to the conditions they have to endure, but also try to prepare for and control those conditions so that they are as favorable as possible. The same is true in business.

5 tips for procuring a cyber insurance policy

Cyber attacks are not only increasingly prominent, but are also increasingly costly. The financial impact of a data breach averages $10 million per occurrence. Data breach insurance coverage may help ameliorate these financial consequences and constitutes a vital part of a comprehensive data security strategy.

Manufacturer’s Corner: Missouri Supreme Court Limits Scope of Manufacturers’ Sales and Use Tax Exemption

Here is a troubling new case from the Missouri Supreme Court.  And I don’t mean troubling in the abstract sense of “oh maybe there could be liability down the road if you don’t do this,” which is pretty much the bread and butter of this column.  I mean troubling in the “you may have already botched this, so you better pull out the books and call the accountants and lawyers” sense.

Legislation Introduced to Limit Operation Choke Point

Missouri Representative Blaine Luetkemeyer recently introduced legislation to the U.S. House of Representatives seeking to require the Federal Reserve and FDIC to provide a material reason to support any order to terminate a banking relationship.

Employers Must Wait for A More Permanent Immigration Solution

On November 20, 2014 President Obama announced that he would take executive action to further immigration reform amid Congressional gridlock. However, it is critical that employers understand the limited scope of the President’s Executive Order.

Manufacturer’s Corner: Incorporating Software Into Your Products (Part 3)

Now that we have completed our brief detour into what the Supreme Court could maybe do with the BP oil spill case if it decides to do anything with it, we resume our ongoing series on what law applies when you incorporate software into your products.

When must a company send a data breach notification?

In our last post, we discussed how to minimize your risk of a data breach. But what do you do if and when a data breach occurs? How will you know when to send a notification? Today, we’ll discuss just that.

Data Breach: Are You Prepared to Respond?

Data breaches are becoming an everyday occurrence. Just ask The Home Depot, Target and Schnuck’s. The number of companies reporting a data breach increased over 30% in the past two years. Experts agree that every company is susceptible to data breaches, and that it is not a question of if but when it will happen.

Manufacturer’s Corner: Supreme Court Considering Case With Important Implications for Manufacturers

We take a break from our series on incorporating software into your products to talk about a case the Supreme Court is considering that may prove significant to manufacturers.  This column is not typically the place to go for predictions on what the Supreme Court may do, but I want to bring this case to your attention, and circumstances are forcing me to do it now rather than later.

The Four I’s to proactively addressing data breach risks

You’ve been hearing about data breaches for quite some time now. It seems like there’s a new one every day. Most of the news focuses on credit card transactions, but regardless of your industry and the safeguards you use to protect your data, if you collect any type of information about your customers, you’re at risk.

Missouri Changes Garnishment Fee

Missouri recently amended Mo. Rev. Stat. §525.230 to allow for higher fees to be charged by financial institutions in processing garnishment orders. Previously, the statute allowed a financial institution to charge a fee equal to the greater of $8 or 2% of the amount to be garnished, for the trouble and expense of processing the garnishment and paying over any garnished funds to the court.

Agencies Plug Several Holes in the ACA Dike

In the years since the 2010 enactment of the Affordable Care Act (“ACA”), the agencies charged with enforcing the ACA have worried that certain responses to the law’s requirements could negatively affect the overall health insurance system. For instance, because the ACA requires insurers to issue individual health insurance coverage without regard to health status, sponsors of self-funded employer plans may be tempted to shift their high-risk employees into the individual market. But by leaving only healthier employees in the self-funded plans, this approach could result in “adverse selection” – leading to an erosion of the individual insurance market.

Manufacturer’s Corner: Incorporating Software Into Your Products (Part 2)

In the first installment of this series, we discussed the general scope of Article 2 of the Uniform Commercial Code, and, in the broadest terms, whether and when the purchase or sale of software falls within that scope.  In this installment, we’ll move toward our goal of understanding when your purchase or sale of software is governed by Article 2 by looking at how the question has been treated by various courts over time.

Same-sex Marriage and its Effect on Health Plans Offering Spousal Coverage

The United States Supreme Court’s decision on October 6, 2014, to deny review of various appellate court rulings (including the Tenth Circuit, the federal appeals court covering Colorado), which had struck down bans on same-sex marriage as unconstitutional, effectively legalized same-sex marriage in the state of Colorado.

Contract Term Requiring Delivery of Aircraft in Airworthy Condition Prevails Despite “As Is” Language in Sale Agreement

The United States District Court for the Northern District of Texas recently decided a case involving an aircraft sales agreement with seemingly conflicting provisions.

Manufacturer’s Corner: Incorporating Software Into Your Products (Part 1)

This column spends a lot of time talking about Article 2 of the Uniform Commercial Code.  A lot of time.  That’s because it’s a column directed to manufacturers, and Article 2, generally speaking, deals with sales of goods.But that “generally speaking” glosses over quite a bit, and it can cause us to miss important issues.

Loan officer’s statements about lien priority in home mortgage transaction do not give rise to borrower’s claims for breach of fiduciary duty and negligent misrepresentation against lender

The North Carolina Supreme Court recently analyzed whether a loan officer owes a borrower a fiduciary duty in a home mortgage transaction.  Dallaire v. Bank of Am., ___N.C.___, 747 S.E.2d 535 (2013), decided June 12, 2014, No. 51PA13.  Jacques and Fernande Dallaire (“Borrowers”) purchased a home as their primary residence in 1998.  Seven years later they filed Chapter 7 bankruptcy due to unrelated business debts. 

Manufacturer’s Corner: Apple Revisited

Remember when I wrote a glowing column about a Master Development and Supply Agreement Apple and its lawyers drafted?  It was one of the most-read posts I’ve written, so I bet a good number of you do.  Since the post was so popular, and since there have been some, well, we’ll say “unanticipated consequences” for Apple, I thought it warranted some follow up.

Employee Benefits Plans – 2015 Inflation Adjustments

Following recent announcements by both the IRS and the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2015.

Class certification denied to putative class alleging Quest Diagnostics engaged in consumer fraud by routinely overbilling patients

The Third Circuit recently affirmed denial of certification of a class of patients who alleged that the medical testing company, Quest Diagnostics, Inc., routinely overbilled patients.  See Grandalski, et a. v. Quest Diagnostics, Inc., et al., No. 13-4329 (September 11, 2014).  Quest Diagnostics is the country’s largest provider of medical testing.

Manufacturer’s Corner: Obligatory Post on the Internet of Things

There’s an unwritten rule that if you blog about manufacturing, you must blog about the Internet of Things.  I blog about manufacturing, so here we are.

Manufacturer’s Corner: Apple’s Master Course on Master Supply Agreements

This post comes to you based on a story by the always-excellent Matt Levine of BloombergView. Evidently Apple loaned a company called GT Advanced Technologies a bunch of money so GTAT could develop and supply Apple with sapphire screens for a long time. Anyway, there may have been a default under part of that agreement, and GTAT filed for bankruptcy protection because that default was going to ruin everything (at least according to industry speculation).

FinCEN’s red flags for identifying human smuggling and/or trafficking

The Financial Crimes Enforcement Network (“FinCEN”) recently released advisory regarding indicators related to human smuggling and human trafficking.  FinCEN states that that human smuggling involves: (1) acts or attempt to bring unauthorized aliens to or into the United States, (2) transporting them within the United States, (3) harbor unlawful aliens, (4) encourage entry of aliens or (5) conspire to commit these violations, knowingly or in reckless disregard of illegal status.  FinCEN states that human trafficking involves: (1) recruiting, (2) harboring, (3) transporting, (4) providing or (5) obtaining a person for forced labor or commercial sex acts through the use of force, fraud or coercion.

Manufacturer’s Corner: A Brief Return to Our Discussion of Statutes of Limitations

A thing I like to do is approach people at parties and other gatherings and ask them if they know they can use contracts to shorten some statutes of limitations.  Usually I get quizzical looks, but I guess the context just worked better when I mentioned it while speaking at a recent event put on by the Kansas Bar Association.  An especially attentive participant asked a good follow-up question that warrants some discussion: can you shorten the limitations period for fraud?

Upcoming “endangered” listing could affect timber harvesting, wind energy and natural gas developments

At a national conference on the Endangered Species Act (ESA) in San Francisco last month, a major topic of discussion was the recent settlement agreement that ended litigation between the U.S. Fish and Wildlife Service (“the Service”) and two major environmental groups.  The settlement agreement is noteworthy because it requires the Service to take action over the next few years to determine whether to list an additional 251 species.  As of May 2014, the Service had listed 97 of these species.  
One species that will be listed pursuant to the settlement agreement is the northern long-eared bat.  The listing of the bat as “endangered” will affect a large part of the country since the bat’s range includes the following 38 states: Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming.

Practical Pointers: Top 10 Pitfalls for Mediation Advocates

Frank discusses a “Top 10” list of pitfalls for mediation advocates to avoid.

Missouri’s Implied Duty of Good Faith and Fair Dealing

The Missouri Court of Appeals for the Eastern District issued a lender-friendly decision earlier this year regarding the implied duty of good faith and fair dealing regarding a promissory note.

HIPAA Compliance Update – Business Associate Agreements and Unique Health Plan Identifiers

On January 25 2013, the Department of Health and Human Services (HHS) issued its final Omnibus Rule, mandating, among other things, that covered entities update their Business Associate Agreements (“BAAs”) with service providers who maintain, utilize, or come into contact with protected health information (“PHI”). Group health plans are considered covered entities and the Omnibus Rule’s expansion of the definition Business Associate meant that several plans entered into BAAs with a variety of service providers by or before last September.

Municipal Solar Development Heats Up with P3 Models

In response to customer demand for clean energy, and with the public sector being driven to install solar power facilities to minimize energy costs, municipal solar development is heating up. One of the ways the construction market is responding to this demand is by offering project delivery through public-private partnerships (P3s).

Recent cases seek increased access to courts to challenge Clean Water Act enforcement actions

The 2014 Missouri Water Seminar was recently held in Columbia, Missouri.  The Water Case Law Update session highlighted three recent court cases that attempted to expand the Supreme Court’s landmark ruling in Sackett v. EPA, 132 S.Ct. 1367 (2012).  In Sackett, the Supreme Court held that an administrative compliance order (ACO) issued by EPA concerning alleged wetland violations was subject to judicial review because it constituted “final agency action”.   Before Sackett was decided, recipients of ACOs had to wait to sue until either the regulatory agency issued an adverse permitting decision or decided to initiate an enforcement action.

Manufacturer’s Corner: Anatomy of a Limited Warranty (Part 5)

In the first four installments of this series, we covered the essential components of an effective limited warranty.  But each of those installments carried an important caveat: that you were not selling consumer goods.  In this fifth and final installment of the series, we turn our attention to additional warranty issues to consider when selling consumer goods.

New Ruling: “All air transportation services are not subject to South Dakota sales or use tax.”

The South Dakota Department of Revenue recently issued a release stating that “all air transportation services are not subject to South Dakota sales or use tax” after June 9, 2014.  Find the release here: http://sdrevenue.blogspot.com/2014/06/all-air-transportation-services-are-not.html.

Environmental Compliance Certifications: What Your Clients Need to Know Before They Sign

On September 9, 2014, Andrew Brought of Spencer Fane will be one of the panelists in the ABA’s Presentation Environmental Compliance Certifications: What Your Clients Need to Know Before They Sign.

Manufacturer’s Corner: Anatomy of a Limited Warranty (Part 4)

We pick up our discussion of effective limited warranties by addressing limitations of remedies.

Missouri Supreme Court Rules that Lenders and Servicers are Subject to the MMPA

The Missouri Supreme Court recently issued two decisions (Conway v. Citi Mortgage, Inc. and Federal National Mortgage Association and Watson v. Wells Fargo Home Mortgage, Inc.) holding originators and servicers of mortgage loans may be subject to causes of action for unfair or deceptive practices under the Missouri Merchandise Practices Act (MMPA).

Eighth Circuit Issues ECOA Decision

The Eighth Circuit recently issued a decision regarding the Equal Credit Opportunity Act (“ECOA”) that may change your bank’s approach to spousal guaranties.

Four weeks and counting for “grandfathered” HIPAA business associate agreements

The HIPAA Omnibus/Final Rule, published on January 25, 2013, changed the specifications for business associate agreements (BAAs). In general, covered entities were required to comply with the changes to the rule; however, rather than requiring covered entities to immediately enter into new BAAs with all business associates, the Final Rule grandfathered valid HIPAA business associate agreements entered into by the covered entity prior to that date through September 22, 2014. But now this grace period is quickly coming to an end. With the ultimate compliance deadline looming, covered entities that took advantage of this grace period will be required to ensure their grandfathered BAAs, and for that matter all their BAAs, are fully compliant with the Final Rule requirements.

FTC PROSCRIPTION FOR ANTITRUST ENFORCEMENT IN HEALTH CARE

On June 19, 2014, Deborah Feinstein, the current Director of the Federal Trade Commission’s Bureau of Competition, addressed the Fifth National Accountable Care Organization Summit in Washington, D.C. Her speech, entitled “Antitrust Enforcement in Health Care: Proscription, Not Prescription, advised that “there is no tension between rigorous antitrust enforcement and bona fide efforts to coordinate care, so long as those efforts do not result in the accumulation of market power.”

The changing face of estate planning

Adlai Stevenson said that which seems the height of absurdity in one generation often becomes the height of wisdom in another.

Putative class action alleging United Airlines breached its frequent-flyer program is dismissed by the Seventh Circuit

The Seventh Circuit recently affirmed dismissal of a putative class action alleging that a major airline improperly calculated frequent-flyer miles.  In Han v. United Continental Holdings, Inc. et al., No. 13-3871, decided August 11, 2014, the plaintiff, Hongbo Han, filed a putative class action against United Air Lines, Inc. and related entities (“United”) alleging it breached the terms of its frequent-flyer program, called the “MileagePlus Program.”

Home builder’s Commercial General Liability Insurance Policy does not cover faulty workmanship of subcontractors

In the case of J-McDaniel Construction Co., Inc. v. Mid-Continent Casualty Company, the Eighth Circuit, applying Arkansas law, had occasion to explore the scope of a home builder’s coverage under its Commercial General Liability Insurance Policy. No. 13-267, August 4, 2014.

Manufacturer’s Corner: Anatomy of a Limited Warranty (Part 3)

In our last installment in this series, we looked at the express warranty portion of an effective limited warranty.  We now turn our attention to the importance of shortening the limitations period for bringing a warranty claim.  Please remember that, for our purposes here, we’re assuming a non-consumer sale.

A New Bill Could Pave the Way for the Post Office to Join the Financial Services Industry

On July 23, 2014, Representative Cedric Richmond introduced the Providing Opportunities for Savings, Transactions, and Lending Act of 2014 (also referred to as the POSTAL Act of 2014).  The bill proposes that the United States Postal Service (“USPS”) be allowed to provide some financial services, including small-dollar loans, checking accounts, and interest-bearing savings accounts.

Manufacturing Custom-made Goods in the United States

Pat and I recently had the opportunity to publish an article with Practical Law, called “Manufacturing Custom-made Goods in the United States.”

FTC Proscription for Antitrust Enforcement in Health Care

On June 19, 2014, Deborah Feinstein, Director of the Federal Trade Commission’s Bureau of Competition, addressed the Fifth National Accountable Care Organization Summit in Washington, D.C.  Her full comments, entitled “Antitrust Enforcement in Health Care: Proscription, not Prescription,” are available on the FTC’s website: www.ftc.gov.

When Does 9.5% Equal 9.56%?

Although 9.5% has been a key threshold in determining the “affordability” of employer health coverage, the IRS has just announced (in Revenue Procedure 2014-37) that this threshold will be adjusted to 9.56% for 2015. This adjustment reflects the fact that health insurance premiums have risen more rapidly than incomes. Similar adjustments have also been announced for related percentage thresholds.

Manufacturer’s Corner: Anatomy of a Limited Warranty (Part 2)

In our last installment, I introduced the importance of making your warranty terms clear.  Now, we turn to the specifics, beginning with the express warranty itself.  Here are some of the boxes you need to check when reviewing your express warranty.

Are federal courts committing a FCRA violation when lawyers pay filing fees online?

Fellow federal practitioners, could something most of us do on a regular basis be a money making opportunity we’ve simply overlooked? An enterprising lawyer in the Northern District of Illinois thought so.  Unfortunately, in the case of Bormes v. United States of America, No. 13-1602, (7th Circuit), handed down July 22, 2014, the Seventh Circuit answered in the negative.

CFPB Issues Policy Regarding Same-Sex Marriages

CFPB Director Richard Cordray recently issued a memorandum clarifying the CFPB’s policy with respect to same-sex marriages. The memorandum clarifies that the CFPB recognizes all lawful marriages that were valid at the time of the marriage in the jurisdiction where the marriage was celebrated.

Administrative Agencies Cracking Down on Overly Broad Arbitration and Severance Agreements

The Supreme Court’s pro-arbitration and pro-alternative dispute resolution jurisprudence is being met with opposition from administrative agencies, especially the National Labor Relations Board (“NLRB”) and the Equal Employment Opportunity Commission (“EEOC”). As a result, common employment practices, such as mandatory arbitration provisions and severance agreements, are being subject to intense legal scrutiny.

SEMINAR: Learn How to Succeed in Government Contracts

If you’ve shied away from government contracts in the past, this free seminar will give you a working knowledge of how to succeed when working with the government.

Antitrust “market allocation” claims against nation’s two biggest grocery wholesalers survive summary judgment

In In re: Wholesale Grocery Products Antitrust Litigation, No. 13-1297 (May 21, 2014), the Eighth Circuit allowed an antitrust case brought by a small town, family owned grocery store in Iowa, D&G, Inc.,[1] to continue against the nation’s two largest wholesale distributors, SuperValu, Inc. and C&S Wholesale Grocers, Inc., finding disputed facts prevented summary judgment.

Lessor of aircraft denied Michigan use tax exemption because aircraft was not leased to the general public in an arm’s length transaction

In FMG Leasing, LLC v. Dep’t of Treasury, FMG Leasing was a limited liability company formed to hold title to an aircraft. No. 312448, 2014 WL 2931938 (Mich. Ct. App. June 26, 2014) (no reported citation available). FMG leased the aircraft to a concrete company that was one of FMG’s forming partners, and to the company’s president. FMG then sought to take advantage of a statutory exception under Michigan law that permits a lessor of tangible personal property to pay use tax on receipts from the rental of the property, instead of paying a sales or use tax on the full cost of the property at the time of purchase.

Update on rideshare battle in St. Louis: Court issues preliminary injunction against Lyft

I previously wrote about the legal battle in St. Louis brought by Metropolitan Taxicab Commission (“MTC”) against the rideshare app company Lyft in the Circuit Court of the City of St. Louis, Missouri, Case No. 1422-CC0089-01. My comment can be found here.
As I discussed, the court entered a temporary restraining order prohibiting Lyft from operating in St. Louis and St. Louis County. On July 14, 2014, the court again ruled in favor of the MTC, granting a preliminary injunction prohibiting Lyft from operating in the St. Louis area until a final decision is reached on the merits of the case.

In Kansas City, EPA Administrator Seeks to Clarify Proposed “Waters of the United States” Regulation

On July 10, EPA Administrator Gina McCarthy spoke to the Agricultural Business Council of Kansas City in an attempt to ease concerns over the Administration’s proposed rule to clarify the reach of the Clean Water Act (CWA).  The proposed rule, issued jointly by EPA and the Army Corps of Engineers, seeks to specify by regulation the scope of the CWA following the 2006 Supreme Court decision in Rapanos v. United States. The competing tests for CWA jurisdiction issued by the Court in Rapanos have complicated efforts to determine when smaller waters, wetlands, and ephemeral streams are subject to CWA jurisdiction and would require government permits before they can be impacted. In response to mounting criticism of the proposed rule from a number of stakeholders, McCarthy tried to reassure the audience, saying, “We don’t believe that we are expanding jurisdiction.”

Manufacturer’s Corner: Anatomy of a Limited Warranty (Part 1)

It’s a sad fact of life at companies and law firms that sometimes things are done a certain way just because that’s how they’ve always been done. Part of the reason this column spends so much time talking about your terms and conditions, however, is because that’s dangerous: how you do things now should be informed by the past, but not bound by the past.

Eighth Circuit continues to hold that Missouri’s economic loss doctrine bars negligent misrepresentation claims involving allegedly defective or unsuitable products

Manufacturers and lessors of equipment and other products doing business in Missouri can take heart that the Eighth Circuit has issued its third opinion in the past year applying Missouri’s economic loss doctrine to bar negligent misrepresentation claims in cases involving allegedly defective or unsuitable products. 

Missouri Governor Signs Bill Extending Sales Tax Exemption

Missouri Governor Jay Nixon has now signed a bill extending indefinitely the exemption of aircraft replacement parts from the Missouri sales tax.

Manufacturer’s Corner: Revocation of Acceptance and the Statute of Frauds

I’m going to break my self-imposed rule of writing for manufacturers instead of lawyers. This post is some pretty in-the-weeds stuff, but the topic has been on my mind and I think it’s interesting. If you have opinions on it, I’d love to hear them.

Hobby Lobby Decision – Contraceptive Mandate Not Applicable To Certain For-Profit Employers

Under certain circumstances, the Patient Protection and Affordable Care Act’s (“ACA”) “contraceptive mandate” cannot be enforced against closely held for-profit corporations.The ACA requires non-exempt employers to offer female employees health insurance plans that cover preventative care and screenings without any cost sharing requirements. “Preventative care” includes contraceptive methods that can prevent a fertilized egg from implanting into the uterus and developing further. Non-profit religious organizations are expressly exempt from the ACA but for-profit employers are not. The issue before the Supreme Court was whether the ACA’s contraceptive mandate was enforceable as applied to closely held for-profit corporations.

Manufacturer’s Corner: Dealing With Sales on Approval or Return

Expanding on our recent discussion about how your shipping terms can affect risk of loss in the product you sell, let’s turn to other contract provisions that implicate the same issue: sales on approval or return.

Colorado Supreme Court Approves Ballot Measure Language Restricting Fracking, Part Two

In another “end run” around the state’s General Assembly, proponents of greater restrictions on oil and gas exploration in Colorado are again employing the initiative process, this time to authorize local governments to enact laws within their geographic boundaries more restrictive than state law, and even go so far as to potentially ban all exploration activity.  Alongside a companion ballot language challenge allowing for more restrictive statewide setback requirements (the subject of a prior article, (Colorado Supreme Court Approves Ballot Measure Language Restricting Fracking), the Colorado Supreme Court ruled that two ballot initiatives permitting a state constitutional amendment allowing for more restrictive local control did not violate “the single subject rule.” Constitution, State of Colorado, Article V section 1(5.5) and section 1-40-106.5(1)(e), C.R.S. (2013).

Colorado Supreme Court Approves Ballot Measure Language Restricting Fracking

In an “end run” effort around the state legislature, proponents of more restrictive oil and gas well setback requirements in Colorado are employing the initiative process to achieve more restrictive minimum setbacks than present state law permits. On June 30th, the Colorado Supreme Court ruled that three potential ballot initiatives permitting a state constitutional amendment requiring the more restrictive setbacks did not violate “the single subject rule.” Constitution, State of Colorado, Article V section 1(5.5) and section 1-40-106.5(1)(e), C.R.S. (2013).

“Common Carrier” and “Sale for Resale” Tax Exemptions Denied to Lessor of Aircraft

The Missouri Administrative Hearing Commission has held that a lessor of an aircraft does not qualify for the “common carrier” or the “sale for resale” tax exemptions, even if the lessee of the aircraft would qualify.

New Study in the Journal Science Affirms Underground Injection from Fracking Causes Earthquakes, While Industry Cautions Reserving Judgment

According to a new study in the journal, Science, an increase in the number of earthquakes in central Oklahoma likely arises from the use of underground injection wells to dispose of treated wastewater from oil and gas fracking operations. The study, funded in part by the U.S. Geological Survey (“USGS”)and the National Science Foundation (“NSF”), focused on Oklahoma earthquakes and injection well practices. The research was led by Cornell University and included researchers from the University of Colorado, Boulder.

Manufacturer’s Corner: Responding to Claims That Your Goods Do Not Conform to Contract Specifications

It’s inevitable: at some point, you will ship goods to your buyer, and the buyer will complain that they don’t conform to the contract specifications.  When you’re dealing with a small shipment or a great customer, often the simplest solution is to accept the return and send replacement goods.  Other times, however, you’ll be dealing with a major shipment or a problem customer, and you must be certain that you protect yourself while responding to the customer’s concerns.

Supreme Court Affirms D.C. Circuits’ Noel Canning Decision, Hundreds of NLRB Decisions May Be Moot

Last week, the United States Supreme Court held that the purported “recess appointments” of NLRB Members Block, Flynn and Griffin were unconstitutional. See N.L.R.B. v. Canning, 12-1281, 2014 WL 2882090 (U.S. June 26, 2014). Therefore, the Board will have to reconsider and reissue hundreds of prior opinions.

How Small is Small?

Lenders that participate in Small Business Administration (“SBA”) loan programs should be aware that the SBA recently issued an interim final rule to increase monetary based small business size standards.  These standards are based on criteria such as receipts, assets, net worth and income.

National Health Plan Identifiers Required by November

The HIPAA Electronic Transactions and Code Sets rule requires most group health plans to obtain new health plan identifier numbers (HPIDs) by November 5, 2014.  While insurers will likely obtain the HPID on behalf of fully insured plans, the task of obtaining the HPID for a self-funded plan will fall upon the plan sponsor.  While the process is relatively simple, plan sponsors should begin identifying which group health plan arrangements are subject to the HPID requirement and communicating with plan vendors regarding the requirements.

Manufacturer’s Corner: When Bankruptcy and Your Shipping Terms Collide

In recent installments of the Manufacturer’s Corner, we have discussed how to protect yourself from insolvent customers and how your shipping terms can expose you to unexpected risk. Thanks to the Bankruptcy Court for the Eastern District of Pennsylvania, we can explore how those two issues play together.

Kansas City Area Restaurants Targeted by Union Organizers

The Union is acting as though it is a public interest group that is seeking to increase the minimum wage to $15. But its true goal is to become the restaurant workers’ exclusive bargaining representative. First, the Union ingratiates itself with restaurant workers by advocating for a substantial increase in the minimum wage. Second, it asks the workers to sign letters that they support and will participate in a strike with other employees in support of a minimum wage increase. Then the union seeks employee signatures on union authorization cards. Finally, once it has collected a sufficient number of signed authorization cards, it files an election petition with the National Labor Relations Board (“NLRB”).

Supreme Court Strikes Down Key Aspects of EPA’s Greenhouse Gas Regulations, But Upholds Other Provisions

Earlier today, June 23, 2014, the United States Supreme Court dealt a blow to EPA’s current approach to regulating greenhouse gas emissions (GHGs) through its air permitting program for new or expanding stationary sources. Utility Air Regulatory Group v. Environmental Protection Agency. No. 12-1146, ___ U.S. ___, June 23, 1014. The Court said it left intact EPA’s ability to regulate 83 percent of such GHG emissions, compared to the 86 percent EPA championed under its approach. Nevertheless, in its ruling the Court undercut key foundations of EPA’s current GHG regulatory approach. This ruling will require EPA to re-think many aspects of its approach to GHGs and will give opponents increased leverage in the upcoming discussions.

Manufacturer’s Corner: Recent Development in Implied Warranties (Part 2)

We continue our discussion of June’s interesting implied warranty cases with a trip south to the Supreme Court of Texas.  As I mentioned in the previous installment of the Manufacturer’s Corner, the Court declared a simple, bright-line rule on how a valid disclaimer of the implied warranty of merchantability affects remote purchasers.

California Modifies Proposed Fracking Regulations, Mandating Seismic Monitoring

The Ventura County Star reported on June 17th that the California Department of  Conservation, Division of Oil, Gas and Geothermal Resources (the “Division”), has modified its proposed hydraulic fracturing regulations mandated by last year’s Senate Bill 4, requiring well operators to conduct real-time seismic monitoring. The modified regulations specify that they apply both to offshore and on shore oil drilling operations. Most drilling off the California coast, however, occurs in federal waters that are beyond the reach of state regulations.

2005 Phase I ESA Will No Longer Satisfy All Appropriate Inquiries Under EPA Proposed Rule

On June 17, 2014, EPA issued a proposed rule in the Federal Register, 79 Fed. Reg. 34480, proposing to amend the standards and practices for satisfying All Appropriate Inquiries (AAI) under CERCLA. In particular, EPA is proposing to remove references to the 2005 Phase I ESA Standard ASTM E1527-05 as satisfying AAI.

Manufacturer’s Corner: Recent Developments in Implied Warranties

In this head-scratcher of an opinion, the Michigan Court of Appeals makes three legal conclusions that will shock practitioners.

Debunking the Rumor that Directors Should Not Have Access to Information in Suspicious Activity Reports

Do you remember that children’s game called “Telephone” that you played long ago at birthday parties, on car trips or around campfires?  You know — the game where one person passes a message to the next, and then to the next?  The message evolves as it travels, inevitably surprising and confounding everyone by the time it reaches the end of the circle.

CERCLA Will Not Save a Toxic Tort Claim which is Barred by a State Statute of Repose

Earlier today, June 9, 2014, the United States Supreme Court handed down its decision in CTS Corp. v. Waldburger, et al., slip op. No. 13–339 (U.S., 6-9-2014). Reversing the Fourth Circuit, the Supreme Court held that the Superfund law’s preemption of state statutes of limitation for personal injury or property damage claims does not apply to state statutes of repose. Not every state has such a statute on the books, but for those that do, this may provide an additional shield for defendants, and an additional hurdle for plaintiffs.

Manufacturer’s Corner: Protecting Against the “Efficient Breach”

The Oregon Supreme Court has given us a great platform to discuss what happens when a buyer simply decides that breaching the contract is a better idea than performing.  It’s an important case to consider, both in your capacity as a seller of goods, and in your capacity as a frequent buyer of goods under long-term sales contracts.

Inflexible Leave Policies can Protect the Rights of the Disabled

Last week, the 10th Circuit Court of Appeals issued its decision in Hwang v. Kansas State University, and directly addressed the legality of so-called “inflexible leave policies,” i.e., policies that set an exact limit on the amount of leave an employee can take.  In that case, Ms. Hwang was hired as a professor at Kansas State and was diagnosed with cancer.  Kansas State had a policy that allowed for no more than six months’ sick leave.  Ms. Hwang argued that this “inflexible” policy was illegal on its face.  The 10th Circuit disagreed.

Manufacturer’s Corner: Can You Prove the Contents of Your Shipment?

In a happy coincidence of timing, the Eleventh Circuit Court of Appeals recently issued an entertaining opinion addressing the Carmack Amendment, which is a federal law limiting the liability of motor carriers for loss or damage of goods during shipment. The opinion will allow us to continue our discussion of mitigating shipping risks, introduced in the last installment of this column.

Perfecting a Security Interest in a Limited Liability Company Ownership Interest – Not a Simple Task

Many loans to small (and not-so-small) businesses include the requirement that the owners pledge to the lender their ownership interests in the prospective borrower. When the borrower is a corporation, the standard approach under the Uniform Commercial Code calls for the lender to perfect its security interest by obtaining physical possession of the certificates representing the stock, along with a “stock power” (separate endorsement by the owner that would allow the lender to transfer the stock to any purchaser in foreclosure). So long as the lender retains possession, it has a perfected, first-priority security interest in the pledged stock.

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