Author: mskllp

Since 1908, Mitchell Silberberg & Knupp LLP (MSK) has proven its ability to understand the complex, demystify the mysterious, and define the unknown. With more than 130 lawyers and offices in Los Angeles, New York, and Washington D.C., MSK is often distinguished as a “go-to” firm by industry and legal insiders, and has extensive experience in a variety of practice areas, including Entertainment & IP Litigation, Labor & Employment, Motion Picture, Television & Music Transactions, Immigration, Corporate Securities, Regulatory, Tax, Trusts & Estates, Real Estate and International Trade. Relentlessly innovative, our lawyers have developed groundbreaking legislation, established influential precedents, and shaped the legal landscape. For more information, visit www.msk.com.

Test the Waters, but Don’t Make Waves

SEC Adopts New Rule Allowing All Issuers to Test the Waters in Registered Offerings

Large group of people forming blue water drop symbol in social media and community concept on white background. 3d sign of crowd illustration from above gathered together

Photo Credit: istock.com/tampatra

By Latore Price and Nimish Patel

On September 26, 2019, the SEC announced that all issuers —including non-reporting issuers and investment companies (including registered investment companies and business development companies) will soon be able to “test-the-waters” in initial public offerings and other registered securities offerings. Under the newly adopted Rule 163B, any issuer will be able to engage in “test-the-waters” communications with qualified institutional buyers and institutional accredited investors.

Previously, under the Jumpstart Our Business Startups Act, only emerging growth companies were permitted to engage in “test-the-waters” communications. Rule 163B provides relief from the from restrictions imposed by Section 5 of the Securities Act on written and oral offers prior to, or after filing, a registration statement for issuers who do not qualify as emerging growth companies. This will give all issuers “flexibility in determining whether to proceed with a registered public offering while maintaining appropriate investor protections.”

Once in effect, communications made under Rule 163B will: (more…)

BITE YOUR TONGUE: NLRB RULES THAT PRODUCE COMPANY’S MEDIA, CONFIDENTIALITY POLICIES ARE LAWFUL
Gavel In Court Room

Photo Credit: istock.com/IPGGutenbergUKLtd

Written by Jonathan Turner

The NLRB under the current administration continues to issue decisions that factor in legitimate business considerations of employers when evaluating rules that are alleged to restrict employee protections under the NLRA.  One such recently issued decision, LA Specialty Produce Company, 368 NLRB No. 93 (October 10, 2019), may have particular significance to many of MSK’s clients because it addresses an important issue on which we frequently have consulted with clients in the past — restrictions on communications responsive to inquiries from the media.

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NLRB ADOPTS EMPLOYER-FRIENDLY STANDARD REGARDING WHAT CONSTITUTES A UNILATERAL CHANGE IN VIOLATION OF THE NLRA
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Photo Credit: istock.com/Natee Meepian

Written by Jonathan Turner

Spoiler Alert – unless you regularly deal with collective bargaining agreements you may find this a tad wonky.

The National Labor Relations Board (“NLRB” or the “Board”) recently fashioned a new, business-friendly standard for determining when an employer’s action taken in reliance on contractual provisions under a collective bargaining agreement (“CBA”) constitutes a “unilateral change” in violation of the National Labor Relations Act (“NLRA”).  Under the new standard, set forth in M.V. Transportation, Inc., 368 NLRB No. 66, the Board has adopted the “contract coverage” test fashioned and historically applied by the Court of Appeals for the District of Columbia.  In doing so, the Board abandoned the “clear and unmistakable waiver” test traditionally applied by the Board.  Under the new standard, the Board first determines if the contract provision relied on by the employer covers the employer’s action challenged by the union.  If so, the Board will conclude that “the agreement … authorized the employer to make the disputed change unilaterally, and the employer will not have violated [the NLRA].”  If, on the other hand, there are no provisions in the CBA that covers a disputed unilateral change, the Board then will consider whether the union nevertheless waived its right to bargain over the change.  In making this latter determination the Board will continue to apply the “clear and unmistakable waiver… analysis to determine whether some combination of contractual language, bargaining history, and past practice establishes that the union waived its right to bargain regarding a challenged unilateral change.” (more…)

PRINT SHOOT PAY DELAY
Model posing for a photograph during a photo shoot

Photo Credit: istock.com/jacoblund

Written by Jeremy Mittman and Stephen Rossi

Finally, an employer-friendly law passed in California! Unfortunately, it only affects a small number of employees— but for those employers that are implicated, the law is a welcome reprieve.

 

On September 5, 2019, California Governor Gavin Newsom signed into law Senate Bill 671, the “Photoshoot Pay Easement Act,” which went into effect immediately.  This law specifies that any short-term print shoot employee (from models to crew members) can be paid on the employer’s next regular pay day (including by mail), rather than on the last day they work. (more…)

RAISING THE BAR: DOL UPS SALARY BASIS REQUIREMENT FOR OVERTIME EXEMPTIONS
Midnight working concepts

Photo Credit: istock.com/takasuu

Written by Jeremy Mittman 

This week, the U.S. Department of Labor (“DOL”) unveiled the final version of its overtime exemption rule, which sets the annual salary threshold workers need to exceed to qualify for the Fair Labor Standards Act’s (“FLSA”) “white collar” exemptions at $35,568 per year (up from the current annual salary threshold of $23,660).  The DOL estimates that about 1.3 million workers who hadn’t previously been eligible for overtime will now stand to receive it once the rule takes effect on January 1, 2020.

 

The FLSA’s “white collar” exemptions apply to employees employed in bona fide administrative, executive, professional, and computer-related capacities, as well as outside sales employees.  If employees meet the requirements for these exemptions (including, where applicable, the salary basis requirement), employers need not pay them overtime for any time worked over 40 hours per week under federal law.

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HAVE INDEPENDENT CONTRACTORS IN CALIFORNIA? YOU MAY NEED TO RETHINK THAT.
iStock-1044578200.jpg

Photo Credit: iStock.com/utah778

Written by Jeremy Mittman, Jeffrey Davine, Robert Lowe, Susan Kohn Ross and Samuel Richman 

On September 18, 2019, California Governor Gavin Newsom signed into law A.B. 5, codifying the “ABC test” adopted in the California Supreme Court decision, Dynamex (see, e.g. prior posts here, here, and here) and ensuring that most California workers should appropriately be classified as employees instead of independent contractors.  The bill goes into effect January 1, 2020.

Though supporters state that the bill is aimed primarily at the so-called “gig economy,” in reality A.B. 5 affects virtually every type of business in California.

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CALIFORNIA ARBITRATION ROUNDUP: EMPLOYERS ARE 3-1 FOR FAVORABLE ARBITRATION RULINGS
definition of arbitration

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Written by Jeremy Mittman

California employers received mostly good news this past month on the arbitration front, with a trio of pro-employer arbitration-related rulings.  The California Supreme Court’s recent ruling invalidating an employer’s arbitration agreement (discussed below) is a notable exception.

California Supreme Court Invalidates Employer’s Arbitration Agreement As Unconscionable.

In OTO LLC v. Ken Kho, the California Supreme Court ruled that an Oakland Toyota dealership’s arbitration agreement with a former employee was unenforceable and was so unfair and one-sided that it was procedurally and substantively unconscionable.  “Arbitration is premised on the parties’ mutual consent, not coercion, and the manner of the agreement’s imposition here raises serious concerns on that score,” the majority opinion said. (more…)

HOLD YOUR HORSES: CALIFORNIA EXTENDS DEADLINE FOR MANDATORY SEXUAL HARASSMENT TRAINING
Clock and calendar

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Written by Jeremy Mittman and Bethanie Thau

In 2018, California passed a law that greatly expanded sexual harassment training requirements for employers (see here). Under the law, employers of as few as five people must provide two hours of interactive sexual harassment training to their supervisors and one hour to all non-supervisory employees. The training was to have been completed by January 1, 2020.  Just before Labor Day, California Governor Gavin Newsom gave employers a welcome reprieve by extending the deadline to comply with the new training requirements by a year — to January 1, 2021. The bill signed by the Governor that extended the deadline also confirms that those employees who received sexual harassment training in 2019 need not be re-trained again for two years.

Tariff Turmoil Gets Hotter!
birds eye view photo of freight containers

Photo by Tom Fisk on Pexels.com

By Susan Kohn Ross

As has been widely reported, on Friday, first President Trump announced and then USTR Lighthizer confirmed the 301 tariffs on goods out of China will increase. Specifically, the tariffs on the goods on Lists 1, 2 and 3 will rise from 25% to 30% starting October 1, 2019, while the tariffs on the List 4 products will start at 15% on September 1, 2019 or December 15, 2019, rather than the original 10%, depending on whether your product is on List 4A or List 4B. USTR also acknowledged there will be a notice and comment period provided in the Federal Register notice to follow. While no doubt many American traders hope the possibility exists to remove products from any of the lists, that seems highly unlikely. While this upheaval continues, companies should also keep in mind the ability to seek exclusions for goods on List 3 expires on September 30, 2019. The exclusion process for goods on List 4 has still not been published. (more…)

ICE To Increase STEM OPT Worksite Inspections
US Customs and Border Protection

Photo credit: iStock.com/danielfela

By Benjamin Lau and David Rugendorf

U.S. Immigration and Customs Enforcement (“ICE”) has recently increased site visits for employers who employ F-1 students under STEM OPT (short for Science, Technology, Engineering, Mathematics Optional Practical Training) work authorization. While ICE has had this authority since the STEM regulations were passed in 2016, the agency only recently started conducting site visits to ensure that employers and F-1 students remain in compliance with the regulations governing F-1 STEM OPT work authorization.

What Is STEM OPT?

STEM OPT allows eligible F-1 visa students with STEM degrees from accredited U.S. colleges or universities to apply for an additional 24 months of Occupational Practical Training. This is in addition to the initial, one-year post-completion OPT granted to all non-STEM-degree F-1 students. In addition to the STEM degree requirements, the F-1 visa student must secure employment with a bona fide employer, work a minimum of 20 hours per week for that employer, and the employer must provide a formal, practical training and learning program within the STEM field which is related to the F-1 student’s degree. Details of the training program are outlined by the employer on Form I-983, which is submitted to and approved by the Designated School Official at the F-1 student’s academic institution.

What Is a Site Visit? (more…)