DOL’s 2023 Priorities, Per Labor Secretary Marty Walsh. Additional personnel topped Labor Secretary Marty Walsh’s wish list for 2023 as he laid out next year’s proposed budget at a hearing in front of the Subcommittee on Labor, Health and Human Services, Education, and Related Agencies. During the hearing, Secretary Walsh was candid: “To be completely honest, I need more staff. We are understaffed at the Department of Labor and, and we’re understaffed in a lot of different places. In all of our offices we could use more people.” The Secretary’s next priority: OSHA and workplace safety. OSHA ended last fiscal year with just 750 inspectors, the lowest ever for the 51-year-old agency. Rep. Rosa DeLauro (D-CT), chair of the Subcommittee, noted in her opening statement that the White House is seeking a $355 million budget increase for worker protection agencies that includes a proposed $89 million increase for OSHA, to roughly $701 million.

When Secretary Walsh is not ensuring the smooth operation of the DOL, he moonlights as an advocate for mental health awareness, an American crisis that has gotten worse during two-and-a-half years of living under a pandemic. Secretary Walsh issued a statement posted to the DOL’s website, candidly (and bravely, to boot) discussing his struggles with alcoholism, and encouraging all with any kind of mental health issue to seek help.  We join the Secretary in his quest to end the stigma.

EEOC And DOJ Issue Important Guidance On Preventing AI-Related Disability Discrimination. As Seyfarth previously reported, in October 2021, the EEOC put employers on notice of an initiative to ensure that AI and other technology used in employment decisions comply with federal ant-discrimination laws. On May 12, 2022, discussed in more detail by Seyfarth here, the EEOC and DOJ  released guidance to help employers using AI to ensure their compliance with the Americans with Disabilities Act. These references provide examples of the types of tools employers are using and describe the ways in which employers might unknowingly discriminate in failing to reasonably accommodate or screen out disabled applicants. Companies should review this guidance and be aware of the specific ways in which AI tools can lead to disability charges and lawsuits, both of which are on the rise.

Legislative Update. While a fair amount of legislation is currently moving through The House of Representatives, many bills are stalled in the Senate. Below is brief look into where those measures currently stand.

  • The House on Tuesday passed H.R. 7309, or the “Workforce Innovation and Opportunity Act.” The measure appropriates approximately $80 Billion from fiscal 2023 through 2028 for federal workforce development programs. The vote in the House was almost exclusively along party lines, 220-196, portending a tough road in the Senate.
  • The House Education and Labor Committee voted 27-19 along party lines Wednesday to approve H.R. 7701, targeting wage theft, or compensation at a rate below what workers and employers agreed on, whether via an employment contract or collective bargaining agreement. The bill would require employers to deliver detailed paystubs, maintain employee-accessible wage records, prohibit mandatory arbitration agreements, and collective action waivers, and would hike fines for violating the Fair Labor Standards Act. Like with H.R. 7309, the party-line vote in the House Committee does not portend well for the measure’s fate in the Senate.
  • Last week, the House passed H.R. 309, or the Rights for the Transportation Security Administration Workforce Act of 2021, again on a mostly party line vote of 220-201. The legislation calls for giving TSA employees the rights and protections provided by Title 5 of the U.S. code, which is what other federal workers are subject to, and benefit from. For example, the measure would give TSA workers the right to collectively bargain. The White House “strongly supports” the passage of the bill, calling it “an important step in ensuring equitable pay for the TSA workforce and is aligned with the 2023 President’s budget request to improve pay for TSA employees.” Regardless, the bill faces an extremely uphill battle in the Senate.
  • In March, the House passed H.R. 2954, or the Securing a Strong Retirement Act of 2021 (SECURE Act) by an overwhelming vote of 414-5. The bill would require employers that establish new defined contribution plans to automatically enroll newly hired employees, when eligible, at a pretax contribution level of 3 percent of the employee’s pay, enable older workers to contribute more to tax-advantaged retirement accounts, and help small employers offer retirement plans by giving them a tax credit. The Senate is considering its own version of the measure, and will likely vote on the measure in Committee in June. Stay tuned, as this measure has the best chance of actually becoming law.
  • In the beginning of April, Senator Ben Cardin (D-MD) and Senator Roger Wicker (R-MS) introduced what was then a bi-partisan effort, the Small Business COVID Relief Act of 2022 (S. 4008), to provide COVID relief for restaurants and other “hard hit” industries. Yesterday, though, the Senate failed to invoke cloture on the motion to proceed, in a 52-43 procedural vote that was subject to a 60-vote threshold. The cloture vote was likely a death knell to a months-long effort to provide a final round of relief for industries that suffered major revenue losses during the pandemic. The House passed a similar COVID-19 relief package in April on a mostly party line vote, but we do not expect any movement in the Senate.

Where Is The BIF Money Going? President Biden has touted the Bipartisan Infrastructure Law, aka the Infrastructure Investment and Jobs Act, as one of the big wins his administration has accomplished. But that measure passed months ago, and it is time to start asking where the money is going. Well, last week, the White House published a list of more than 8,500 infrastructure funding allocations made since the infrastructure law was enacted six months ago. The appropriations are mostly earmarked for highways and bridges, as well as grant awards for airports and some water and resiliency projects. So far, the largest specified project funded is an Advanced Reactor Demonstration Program grant under the Department of Energy for a project in Kemmerer, Wyoming, for $1.3 billion. The list was released as part of a sort of guide to the infrastructure law published to mark the six-month anniversary of the law’s signing. A lot of work, and a lot of allocations, remain. Stay tuned.

The Future of the EV? As Seyfarth recently reported in its Future of Automotive Series, electric vehicle manufacturers and interest groups representing dealers and technicians who sell and service gas-powered automobiles continue to battle in state legislatures. Over the past decade, several state laws have been passed, with some states siding with EV manufacturers, allowing them to sell and service vehicles directly, while some states permit only Tesla to do so, while other states completely prohibit EV manufacturers from direct sale and service. The pace of legislative change has slowed recently, however. And while there has been a push nationally to promote the adoption of EVs, including an executive order from the Biden Administration targeting a 50% EV sales share in the US by 2030, the existing state laws and the reluctance of state legislatures to make necessary changes will likely continue to hinder EV adoption and distribution directly to consumers.

States Take The Paid Family Leave Mantle In Light of Congressional Inaction.  As Seyfarth reported, on May 10, 2022, Delaware became the eleventh state to enact a paid family leave law — the Healthy Delaware Families Act. This continues a growing trend of states passing paid leave laws in the absence of Congressional action on Capitol Hill. The patchwork of state leave laws is frustrating to employers doing business in more than one state, given the different requirements and setups of the various state laws. But unfortunately, it doesn’t look like Congress is likely to act on this issue soon — it is more likely that additional states will pass their own laws that employers will have to contend with.

More Of The Great Loosening: California Eases COVID Workplace Safety Rules. On April 26, the Occupational Safety and Health Standards Board — which is part of the California Division of Occupational Safety and Health — voted to approve the third readoption of the COVID-19 emergency temporary standards, or ETS, which became effective May 06. We have been following how the California administrative state deals with the pandemic through its ETSs. As far as substance goes, while much of the current ETS remains intact, the changes should ease employer headaches by removing some of the more burdensome requirements. By way of example, the new ETS:

  • removes the definition of “fully-vaccinated” from the ETS — therefore, the ETS will no longer distinguish between fully-vaccinated and not-fully-vaccinated employees;
  • removes, in most instances, face covering requirements for employees not fully vaccinated;
  • removes most cleaning and disinfection requirements; and
  • updates the definition of testing to allow for self-administered and self-read tests for purposes of return-to-work, but only if another means of independent verification of the results can be provided (e.g., a time-stamped photograph of the results).

Seyfarth had put together an excellent blog on the new ETS, summarizing all of the relevant requirements. It is worth a read.

By Adam R. Young, Brent I. Clark, and Craig B. Simonsen

Seyfarth Synopsis: Federal OSHA is rolling out an aggressive COVID-19 enforcement program to inspect “high hazard” employers, as well as re-inspect those healthcare employers who have received COVID-19 complaints in the past. 

In March 2022 at the ABA OSHA conference, OSHA enforcement leadership publicly declared the “COVID-19 endemic” to be federal OSHA’s #1 enforcement priority for 2022. We have documented the agency’s continued mission creep to target hospitals and protect healthcare employees during the COVID-19 pandemic. Of course, OSHA cannot lawfully merely select hospitals and open inspections to ensure COVID-19 compliance. The Agency must have a complaint, injury/illness report, or other “neutral” basis upon which to inspect a facility.

OSHA has been rolling out inspections under its National Emphasis Program (NEP) for COVID-19 since July 2021. These inspections target certain “high hazard” industries, including health care, nursing care, manufacturing, warehousing, and meat processing. Each OSHA area office has allegedly dedicated at least 15% of its enforcement resources to programmed COVID-19 inspections. Based on the figures we are hearing at the Area Office level and our clients’ open inspections, we estimate that hundreds of these inspections are being performed by OSHA across the country, on top of the many COVID-19 inspections performed in OSHA state plan states.

On March 2, 2022, OSHA issued a COVID-19 Focused Inspection Initiative in Healthcare to supplement its COVID-19 NEP inspections. The memorandum provides instructions to Federal OSHA Area Offices for a focused, short-term inspection initiative directed at hospitals and skilled nursing care facilities that treat COVID-19 patients. OSHA’s stated goal in the Initiative is to mitigate the spread of COVID-19 and future variants, and ensure the health and safety of healthcare workers at heightened risk for contracting the virus. Through the Initiative, OSHA plans to assess employer compliance efforts, including the readiness of hospitals and skilled nursing care employers to address any ongoing or future COVID-19 surges.

For this initiative, federal OSHA assembled a list of every healthcare and nursing establishment that has received a complaint letter since March 2020. OSHA then has been using an algorithm to randomly select employers from this list.  Employers have been surprised to have OSHA CSHOs opening inspections and explaining that the inspections are occurring based on allegations closed out more than two years ago! Employers should be aware that these inspections may be opened under the OSHA COVID-19 NEP and Focused Inspection Initiative, and they may need to take action to consult with counsel to ensure that the inspection is proceeding lawfully.

Employers always have the option of requiring OSHA to seek a search warrant and then enforce the warrant in federal court. In a warrant action, Tenet Healthcare challenged the enforceability of the COVID-19 NEP in federal court in Lubbock.  The Court did not grant a Temporary Restraining Order against the OSHA inspection and Tenet later withdrew its complaint. Accordingly, the limited case law demonstrates the challenges with an aggressive litigation strategy.

Employers, particularly in health care, should prepare for ongoing OSHA inspections relating to COVID-19. For employers preparing to defend OSHA inspections, we recommend reviewing compliance with record-keeping obligations, including OSHA Form 300 logs and COVID-19 logs where applicable.  If OSHA does come onsite, a designated point person should be professional when OSHA arrives, sit the OSHA compliance officer down in a conference room, and learn the scope of the inspection. Employers should confirm that OSHA has a lawful, neutral basis for the inspection, and consult with outside counsel to ensure the employer’s company is protected. OSHA inspection management is about focus and control, and keeping the inspection limited in scope.  Consult qualified outside counsel if there are any questions relating to the OSHA inspection.

For more information on this or any related topic please contact the author, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Danita N.Merlau and Benjamin J.Conley

Seyfarth Synopsis: In light of recent state-level trends, businesses have begun exploring avenues to assist employees in states with restrictive abortion laws with travel to nearby states to receive abortion services. In implementing these programs, employers should consider the various ERISA and tax code-related provisions that may impact design.

In recent years, various state efforts to impose more restrictive abortion laws were blocked by the courts because they were found to violate U.S. Supreme Court precedent established in Roe v. Wade and Planned Parenthood v. Casey.  Two recent developments have changed the landscape in certain states:

  • On September 1, 2021, Texas SB 8 went into effect, offering a $10,000 reward to any person who successfully sued another individual who performed or facilitated an abortion. The U.S. Supreme Court declined to block the law’s implementation.  While the law is being challenged in many other venues, its unique enforcement scheme has slowed judicial review and it remains in effect today.
  • On May 2, 2022, Justice Samuel Alito’s draft majority opinion in Dobbs v. Jackson Women’s Health Organization was leaked to the public, suggesting that the Court intends to overrule Roe and Casey, permitting each state to independently determine whether to ban or restrict abortion services. At issue in the case was Mississippi’s “Gestational Age Act,” which would generally ban all abortions after 15-weeks’ gestation.

While the draft majority opinion has no immediate legal impact unless and until issued (likely in late June), the signal from the opinion, combined with the currently-in-force Texas law, has led many employers with employees in states that have (or will) restrict abortion services to consider whether and to what extent they can assist employees in those states.

Overview of State Abortion Laws

Aside from the currently-in-force Texas law, 12 other states have so-called “trigger” laws that could immediately restrict or prohibit abortion services in the event of a Supreme Court ruling overturning Roe.  As of date of publication, those include:

Idaho Wyoming North Dakota South Dakota
Utah Oklahoma Missouri Arkansas
Kentucky Tennessee Louisiana Mississippi

Several other states are moving forward legislation in anticipation of the Supreme Court’s ruling this summer.  Notably, on May 3, Oklahoma signed into law a Texas-style private enforcement right of action against abortion providers, and other states are considering similar legislation.

These restrictions take a variety of forms, from imposing shorter timeframes to receive abortion services following conception, to outright bans on abortions.  Some of the laws are enforced in a so-called “bounty-style” format where individual citizens can sue persons who assist in facilitating abortions.  Others allow for governmental enforcement (with both civil and criminal sanctions).  Some state laws would propose banning both abortion procedures as well as shipment of abortifacient drugs to residents within the state.

At present, we are not aware of any states that would limit or restrict travel out of the state to receive abortion services, but at least one state, Mississippi, is considering such a measure.

This is merely a summary of the current state of affairs, which is constantly evolving.  For more up-to-date information, you can visit The New York Times’ state tracker.

Design of Employer Provided Abortion Travel Benefits

While issues continue to arise as employers explore how to structure an employee travel benefit, there are, we believe, a few key categories of concern:

ERISA Preemption

Many employer health plans provide coverage or reimbursement for abortion-related services (including abortifacient drugs) in some form.  In light of the Texas law and proposed laws that would prohibit shipping abortifacient drugs to employees in certain states, some employers have asked whether they could face potential liability based on services covered under their health plans.

At present, the abortion laws “on the books” only restrict coverage for abortion services provided within the state at issue.  We are not aware of any laws that would restrict or limit a plan that assisted an employee with interstate travel to receive abortion services.  Even so, we are aware of at least one state that is considering passing a law that would impose liability on any party assisting a resident with travel to another state to receive abortion services.  And in light of the draft language in the Supreme Court opinion, more states may feel emboldened to go even further.

Generally, ERISA preempts state laws that “relate to” any ERISA plan.  However, ERISA will not preempt state laws that only have an indirect impact on ERISA plans.  A number of lower court and Supreme Court decisions have outlined the scope of ERISA preemption.  Here, the analysis is primarily driven by the following decisions:

  • Gobeille v. Liberty Mutual Ins., 136 S.Ct. 936 (2016).  In Gobeille, the Supreme Court reviewed a Vermont database reporting law that required plans to keep records and report certain information to the state, which was developing an “all-payer” database.  There, the Court held that the state law was preempted by ERISA because it “impose[d] duties that are inconsistent with the central design of ERISA, which is to provide a single uniform national scheme for the administration of ERISA plans without interference from laws of the several States.”  The Court further noted that such requirements, if imposed in various jurisdictions, could “create wasteful administrative costs and threaten to subject plans to wide-ranging liability.”
  • Rutledge v. Pharmaceutical Care Management Association, 2020 WL 7250098 (2020).  More recently, the Supreme Court in Rutledge upheld an Arkansas law requiring pharmacy benefit managers (including PBMs for self-funded ERISA plans) to reprice claims for prescription drugs at certain established levels, and to offer a unique appeals process for pharmacies disputing their reimbursement levels.  In upholding the law, the Court noted that “ERISA does not preempt state rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substantive coverage.”

There is an argument that state abortion laws are more similar to the Vermont law that was found to be preempted in Gobeille than the PBM law that was upheld in Rutledge.  Similar to the Vermont law in Gobeille which imposed a duty on plans that was inconsistent with the design of ERISA to provide a uniform national scheme without the interference of laws from several states, state abortion laws could potentially require a plan to be administrated in a different manner in each state.  Moreover, unlike the Arkansas law in Rutledge, state abortion laws do not seek to merely alter costs and incentives, but rather impose a substantive plan design restrictions.  Notably, however, the abortion laws at issue here do not mention employer health plans.

One caveat to the strength of the preemption argument is that it is unclear if the Court in Rutledge upheld the law because it viewed the law as substantively different than the Court in Gobeille, or if the Rutledge ruling presents a fundamental shift in the Court’s preemption jurisprudence.  Additionally, the Court’s make-up has changed since Rutledge and Gobeille.  Given that ERISA preemption is not a doctrine that breaks clearly along ideological lines, it is difficult to predict how the new Justices may view the scope of ERISA preemption.  We should also note that ERISA contains a “savings clause” that allows states to regulate fully-insured health plans.  So employers offering a fully-insured health plan in a state with abortion restrictions may have fewer coverage options.

Scope of Eligibility

Generally, and as described below in “Emerging Trends,” most employers are currently considering offering some form of travel reimbursement for employees in states impacted by current or future laws restricting abortion services.  One immediate question that employers should consider is whether this benefit will only be offered to participants in the employer’s health plan, or if it will be made available to the employer’s entire workforce.

Generally speaking, employer-sponsored “group health plans” are subject to a host of federal mandates, including the requirements that the benefit (i) cover a pre-defined list of preventive care services and (ii) impose no annual or lifetime dollar limits.  To the extent an employer-sponsored abortion services travel benefit were to be considered a “group health plan,” it likely could not be offered on a stand-alone basis without running afoul of these federal guidelines.

At the outset, we should note it is unclear whether reimbursement for travel relating to abortion services would even constitute an ERISA benefit, let alone a group health plan.  On the one hand, the tax code would permit, the benefit to be provided under health plan on a tax-free basis or reimbursed through an HRA or health FSA (as described in greater detail below).  On the other hand, a benefit is only a group health plan to the extent it provides “medical care,” and viewed narrowly, travel expenses are typically not medical care.

Assuming, for the sake of argument, that the DOL would view a travel reimbursement benefit as a group health plan, we believe there are several options for employers who seek to offer a more broad-based benefit:

  • Integrated HRA. DOL guidance would permit employers to offer a stand-alone health reimbursement arrangement (HRA), but only if that HRA is deemed to be “integrated” with another health plan.  Generally, that guidance would allow an employer to offer a stand-alone HRA to its employees as long as those employees (i) were offered the employer’s coverage, (ii) declined that coverage, (iii) were enrolled in other group coverage (g., coverage through a spouse’s plan), and (iv) were permitted to opt-out of the HRA at least annually.
  • Expand Scope of Coverage. A broad-based travel benefit would be less likely to be viewed as a group health plan providing medical care (even if some employees were to take advantage of the benefit for medically necessary care).  Employers may want to impose some guardrails regarding how the benefit may be used, but employers should be aware that the closer the benefit is tied to medically necessary care, the greater the likelihood that it would be viewed as an ERISA benefit.  A less direct form of restriction might limit the scope of the benefit to wellness-related travel, including travel for general health and wellbeing.
  • Standalone Telehealth. Telehealth is viewed by the DOL as a “group health plan”, meaning it is subject to the same restrictions under federal law noted above and typically could not be offered on a stand-alone basis.  That said, during the COVID-19 pandemic the DOL relaxed these restrictions and temporarily exempted telehealth from most Affordable Care Act’s mandates (including the preventive service requirement).  The exemption continues through the end of the plan year beginning before the end of the Public Health Emergency (PHE).  The PHE was renewed in April and is currently set to expire in mid-July, unless further extended.  The DOL has advised, however, that it will offer plans a 60 day advanced notice before allowing the PHE to expire, so it is looking increasingly likely that it will be extended further, at least through mid-October.  While the PHE remains in effect, employers might consider offering a broad-based telehealth benefit, which would allow employees in most places to access medical consultation and potentially to receive a prescription for abortifacient drugs.  We do note, however, some states currently ban telehealth for medication abortions by requiring an in-person element or prohibit the shipment of abortifacient drugs to residents within the state.  So, this option may be limited in its effectiveness.
  • Taxable Benefit. Employers may also choose to reimburse travel on a post-tax basis either under the plan or outside of the plan.  Providing such reimbursements on a post-tax basis provides greater flexibility on what expenses may be reimbursed, and makes the benefit appear less related to medical care (which can always be provided on a tax-free basis).  

HSA Impact

An employee enrolled in a High Deductible Health Plan (HDHP) cannot be covered by a plan that covers or subsidizes medical services (other than preventive services, like the flu vaccine) before satisfying his/her deductible.  If services are covered before the deductible is met, the plan will fail to be a HDHP, rendering the covered person ineligible to make tax-favored contributions to a health savings account (HSA) for that year.  Depending on how an employer’s travel benefit is structured (as discussed above), employers may want to require that employees in an HDHP satisfy their deductible prior to receiving reimbursement for travel costs relating to abortion services.  More guidance from the IRS on this issue would be welcome.

Tax Considerations

Many employer plans already include a travel benefit for the employee (and, in some instances a guest) related to the provision of certain medical procedures or services that cannot be obtained near where the employee resides, or to direct the employee to certain network providers or “centers for excellence”.  Travel benefits may, depending on the employer plan, cover the cost of reasonable travel expenses, including limited reimbursement for lodging and meals.

Such coverage may potentially be provided on a tax-free basis so long as travel is “primarily for and essential to” receiving medical care.  In limited circumstances, and subject to restrictions on the amount of reimbursement, tax-free coverage might be able to be provided for lodging, meals, and for parents traveling with a child.  Similarly, such qualifying expenses could be reimbursed under a health flexible spending account, a health reimbursement account, or a health savings account.

Notwithstanding the foregoing, employers should be aware that Code Section 213(d) (which generally defines what benefits may be provided on a tax-free basis under health plans, including flexible spending accounts) generally excludes amounts expended for illegal operations or treatments.  For these purposes, the IRS usually looks to the laws in effect where a service was received or procured.  In general, this should not impact employers who are assisting employees in traveling to states where abortion is permitted, but it could restrict tax-free reimbursement for services received in any state where abortion is illegal.

Emerging Trends

While more reports of companies offering travel-related abortion benefits are emerging daily, we are summarizing below a few of the programs that seem to be emerging in the marketplace:

  • Coverage for travel expenses for non-life-threatening medical treatments (abortion & otherwise), up to an amount capped annually.
  • Coverage for travel expenses where employees are unable to receive abortion services in-state due to legal restrictions.
  • Establishment of an employee support fund/foundation to assist with travel costs relating to abortion services.

Employers implementing a travel benefit for abortion services should continue to closely monitor state law developments, as well as federal guidance which could serve to expand or restrict the scope of permissible coverage.

By Renée AppelRebecca DavisGiovanna Ferrari, and Ameena Majid

Seyfarth Synopsis: Staying true to the SEC’s 360 degree approach for advancing the Biden Administration’s ESG agenda, on April 29, 2022, the Securities and Exchange Commission (“SEC”) sued a publicly traded Brazilian company.

The SEC filed a securities fraud lawsuit against Vale S.A. (“Vale”) for, among other conduct, making misleading environmental, social, and governance (“ESG”) disclosures. By suing Vale, Melissa Hodgman, Associate Director of the Commission’s Division of Enforcement, explained that the SEC seeks to demonstrate that it “will aggressively protect our markets from wrongdoers, no matter where they are in the world.”

In the world of ESG and stakeholder capitalism, the pressure for organizations to make commitments and be transparent on their progress is high.  And, balancing potentially competing stakeholder interests to drive long-term value is a challenge. It requires a delicate balance to say the least.  It also requires an all hands approach and commitment to creating an internal structure that supports an alignment between commitments and actions by having checks and balances horizontally across functions and vertically into the boardroom.  As the SEC shows in the Complaint against Vale, the stakes for misalignment are high.

The Complaint

According to the Complaint filed by the SEC, Vale deceived investors about the safety and stability of the dams it built to hold waste from its mining operations. The SEC alleges that Vale was aware of and concealed the risk that its Brumadinho dam could collapse.  When the dam ultimately collapsed in January 2019, it resulted in 12 million cubic tons of mining waste (a.k.a. “tailings”) and 270 deaths, along with significant environment, social and economic damage. As characterized by Gurbir Grewal, Director of the SEC’s Division of Enforcement, “[b]y allegedly manipulating [its] disclosures, Vale compounded the social and environmental harm caused by the Brumadinho dam’s tragic collapse and undermined investors’ ability to evaluate the risks posed by Vale’s securities.”

If proven true, Vale’s failure to address the dam before the disaster starkly contrasts its purported commitments and public disclosures. The cause of the Brumadinho dam collapse was a geo-phenomenon called “liquefaction,” which also caused the collapse in 2015 of another dam co-owned by Vale. Following that disaster, Vale became subject to new safety regulations and audits. In addition, Vale pledged to commit to sustainability and “zero harm” to its employees and surrounding communities.

Vale made these ESG assurances in its public disclosures, including in sustainability reports, SEC periodic filings, presentations, and ESG webinars. Yet, notwithstanding such assurances, according to the SEC’s findings, as early as 2003, Vale allegedly did not meet recommended safety standards even though it knew that the Brumadinho dam’s fragile state posed significant risk. The SEC further alleges that Vale knowingly or recklessly obtained fraudulent stability declarations in connection with audits to shape its false narrative about the dam.

The SEC looked beyond the formal SEC filings and concluded that Vale’s President and CEO falsely touted the condition of the dams in a public article, Vale produced a sustainability report that included false statements, and Vale conducted webinars that contained false proclamations about compliant measures and the general condition of the dam. Moreover, the SEC claims that Vale perpetuated the false statements even after the collapse.

The causes of action brought by the SEC include violations of Section 10(b) and Rule 10b-5, which require companies, directors and officers to make accurate and not misleading statements to investors. The SEC also brought a claim under Section 17(a), which bars companies and individuals from engaging in fraudulent conduct that could negatively impact investors.  Unlike Section 10(b) and Rule 10b-5, Section 17(a) does not require a showing of scienter in civil matters. Last, the Commission brought a claim under Section 13(a), which imposes reporting obligations. The SEC seeks an injunction against Vale for future violations of securities laws, as well as a disgorgement of ill-gotten gains and civil monetary penalties.

Notable Takeaways

Accountability and Transparency – Without a doubt, the Complaint alleges some fairly egregious behavior on the part of Vale. However, the allegations and the causes of action lodged against Vale crystalize that the SEC will rely on disclosures outside SEC filings to illustrate fraud. In this new era of stakeholder capitalism, the Complaint also highlights how the alignment of commitment and action will be scrutinized.

Stakeholder Capitalism – ESG is an enterprise-wide financial value proposition that signals balancing all stakeholders to drive that value.  In the Complaint, the Commission also underscored that the misrepresentations not only misled investors but government regulators and communities given the loss of life along with the pure environmental damage to those affected communities. In this way, the allegations against Vale reinforce the SEC’s recent commitment to aggressively regulate, monitor and litigate environmental and social harms affecting all stakeholders, not just corporate investors.

Director  Oversight and Management Execution – Notably, the SEC did not name any individual defendants. But, it did highlight the actions and statements made by Vale’s CEO, corporate geotechnical risk management group, and other executives. It also focused on the chain of command and reports made to directors and senior management as to the safety of the dam.  While a limited number of ESG related-claims have been pursued to date, this new enforcement action demonstrates the broad scope of risk to directors and officers with respect to their ESG related statements, activities and oversight, even when such statements and conduct are not in connection with SEC required filings.

As organizations continue to build the infrastructure for oversight and execution of their ESG programs, directors and senior management should closely review their ESG goals, achievements, and representations on a regular basis with a focus on transparency and accuracy, as well as impact to all relevant stakeholders. This enforcement action is certainly a harbinger of more regulatory and private actions.

If you would like more information about developing an ESG Program, please contact the authors. For information about ESG in general, please see our report, ESG 101: Landscape & Considerations.

By Erin Dougherty Foley and James Nasiri*

Seyfarth Synopsis: On April 14, 2022, the U.S. Court of Appeals for the Seventh Circuit affirmed summary judgment in the employer’s favor on Title VII race discrimination claims filed by an Indiana University lecturer. In rejecting the lecturer’s claims of unequal pay and failure to promote, the Court shed light on how to establish a proper comparator and the general importance of consistent employee treatment with respect to promotion and compensation decisions.

In 2010, the University of Indiana hired the plaintiff, an African American man, as a lecturer for its Kelley School of Business Marketing Department. Three years later, the plaintiff inquired about a promotion to senior lecturer, but his Department Chair, Professor Krishnan, discouraged him from applying because lecturers typically were not promoted until their sixth year. The University subsequently promoted the plaintiff to senior lecturer in 2016, and by this time, he also served as Diversity Coach for the University’s MBA program. However, the plaintiff resigned from his position as Diversity Coach in the spring of 2017, which resulted in him losing the additional $25,000 per year that he received for this role.

During the summer of 2018, the plaintiff complained to his Department Chair after learning that a White lecturer hired in 2016 – Josh Gildea – was already making nearly as much in base salary as the plaintiff. Specifically, while the plaintiff was the highest paid lecturer in the Department at $98,750, he complained that Professor Gildea was already earning $94,000. Over the next few weeks, the plaintiff made several additional complaints to his supervisors, generally claiming that Professor Krishnan had discriminated against him on numerous occasions because of his race. Professor Gildea then received a promotion to senior lecturer in 2019, leading the plaintiff to file a lawsuit against the University alleging racial discrimination under Title VII.

The district court granted Indiana University’s motion for summary judgment, and the plaintiff appealed to the Seventh Circuit. On appeal, the plaintiff focused on two situations that allegedly demonstrated the University’s racial bias: 1) Professor Krishnan discouraging him from seeking a promotion in 2013; and 2) the plaintiff’s aggregate salary in comparison to Professor Gildea’s salary between 2017 and 2019.

As to the 2013 incident with Professor Krishnan, the Seventh Circuit found this claim to be time-barred. A Title VII claimant must file an Equal Employment Opportunity Commission (“EEOC”) charge within 300 days of the allegedly unlawful employment practice, and here, the plaintiff did not file an EEOC charge until May 2019, which clearly falls well beyond the statutory period. The plaintiff sought to apply the doctrine of equitable tolling to save his failure to promote claim, arguing he did not realize that Professor Krishnan discriminated against him until Professor Gildea was promoted in 2019. However, the Court reasoned that the plaintiff must have realized this alleged discrimination by at least 2018 since he lodged multiple discrimination complaints around this time.

Regarding his claim of unequal pay, the plaintiff pointed out that, between the 2017-18 and 2019-20 school years, Professor Gildea earned $171,731 more than the plaintiff did. In response, the University demonstrated that $105,000 of that difference was due to Professor Gildea’s role as Director of the Business Marketing Academy (“BMA”), which achieved notable success under Professor Gildea’s supervision. The plaintiff countered that the remaining salary difference nevertheless demonstrated a race-based compensation disparity, but the Seventh Circuit disagreed. To that end, the University was able to show that Professor Gildea taught several “overload” classes in excess of a typical lecturer’s course load, and that he received larger raises for growing the BMA into the largest academy in the MBA program. Accordingly, the Court held that the plaintiff failed to establish Professor Gildea as an adequate comparator given that the plaintiff taught fewer classes than Professor Gildea and resigned from his administrative role as Diversity Coach (unlike Professor Gildea, who remained Director of the BMA). The Court thus affirmed summary judgment in the University’s favor.

The Seventh Circuit’s analysis of the plaintiff’s supposed comparator evidence provides several notable reminders for employers potentially facing similar Title VII claims. For instance, the Court highlighted the standard of proof for an unequal pay claim of this nature: the plaintiff must show “unequal pay for equal work.” As Indiana University did in this case, employers should ensure that promotions, salary increases, and bonus payments are grounded in a legitimate (and of course, documented!) work-related reason. Moreover, it is important for employers to keep their promotion/salary increase standards consistent across their respective departments or units. A key point in the University’s favor was the fact that Professor Gildea performed more work and achieved more tangible success than his Department peers, leading him to receive larger raises in compensation.

Finally, the Seventh Circuit made an interesting statement when the plaintiff tried to challenge the University’s reviews of Professor Gildea’s performance. Here, the plaintiff argued that Indiana University gave too much credit to Professor Gildea for the BMA’s success. However, the Court noted that it is “not a super-personnel board,” meaning that it would not assess the University’s judgment in making compensation decisions. This is an important point for employers, as it shows that, so long as compensation decisions are grounded in legitimate evidence and supported by documentation, courts will generally not substitute their judgment for that of the employer.

*James Nasiri is a law clerk with Seyfarth, and Erin Foley is grateful for his assistance with this post.

By Jennifer A. RileyAlex W. Karasik, and Tyler Z. Zmick

Seyfarth Synopsis:  In Sosa v. Onfido, Inc., No. 20-CV-4247, 2022 U.S. Dist. LEXIS 74672 (N.D. Ill. Apr. 25, 2022), the Court issued the latest plaintiff-friendly decision under the Illinois Biometric Information Privacy Act (“BIPA”), putting businesses and employers on notice that the statute can apply to photographs in addition to the typically-alleged facial and hand scans.  The Court denied the Defendant’s motion to dismiss on the basis that: (1) photographs and information derived from photographs are protected by BIPA; (2) Plaintiff sufficiently plead a claim for liquidated damages; and (3) the BIPA does not violate the First Amendment. 

Case Background

Plaintiff filed suit alleging that the Defendant markets and sells proprietary facial recognition software that is used by online businesses to verify consumers’ identities.  Id. at *2.  To verify a consumer’s identity, the consumer first uploads a copy of his or her identification and a facial photograph.  Id.  The software then scans the identification and photograph to locate the facial images on each document; extracts a unique numerical representation of the shape or geometry of each facial image, which is often called a ‘faceprint,” compares the faceprints from the consumer’s identification and photograph; and generates a score based on the similarity of the faceprints.  Id.  The software also can compare the faceprints obtained from a consumer’s identification or photograph with other biometric data in Defendant’s database, such as the biometric data of known masks or other consumers’ photographs.  Id. at *2-3.  Online businesses can integrate the software into their products and mobile apps in such a way that consumers seeking to verify their identities likely do not know that they are interacting with and providing their sensitive information to Defendant, a third party.  Id. at *3.

Plaintiff was a member of an online marketplace that partnered with Defendant to verify its users’ identities using Defendant’s software.  Id.  Plaintiff claimed that, in April 2020, Plaintiff verified his identity in the online marketplace and that Defendant allegedly used its software to scan Plaintiff’s face, extract his faceprints, compare the two photographs, and then Defendant kept his unique faceprint in a database and accessed it every time another person used Defendant’s verification process.  Defendant purportedly did not inform Plaintiff that it would collect, store, or use his biometric identifiers derived from his face,” and Plaintiff never signed a written release allowing Defendant to do so.  Id. at *3-4.

Plaintiff filed suit against Defendant in the Circuit Court of Cook County, Illinois, alleging that it violated the BIPA, 740 Ill. Comp. Stat. 14/1 et seq., seeking to represent himself and a putative class of Illinois residents “who had their biometric identifiers or biometric information, including faceprints, collected, captured, received, otherwise obtained, or disclosed by Defendant while residing in Illinois.”  Id. at *4.  Defendant removed the lawsuit based on diversity jurisdiction and the Class Action Fairness Act (“CAFA”).  Id. at *5.  After the Court denied Defendant’s motion to compel arbitration (and the Seventh Circuit affirmed), Defendant moved to dismiss on the grounds that: (1) Plaintiff did not state a viable claim under the BIPA because the information Defendant allegedly collected — photographs and information derived from photographs — is not protected by the BIPA; (2) Plaintiff failed to adequately state a claim for liquidated damages; and (3) the BIPA violates the First Amendment.

The Court’s Decision

The Court denied Defendant’s motion to dismiss on all three grounds.

The BIPA’s Application To Data Derived from Photographs

The Court first addressed the argument that Plaintiff failed to state a claim under the BIPA because Defendant’s software captured information from user-submitted photographs, and neither photographs nor information derived from photographs are covered by the BIPA.  The Court’s analysis turned on Section 10 of the BIPA, which defines “biometric information” and “biometric identifier” and also lists items that do not fall under those definitions — specifically, “biometric identifiers do not include photographs, and biometric information ‘does not include information derived from items or procedures excluded under the definition of biometric identifiers.’”  Mem. Op. & Order at 11 (quoting 740 ILCS 14/10).  The Court acknowledged that data derived from photographs is not “biometric information,” but it held that data derived from photographs in the form of “scans of face geometry” can constitute biometric identifiers.  Id. at 11-12 (“As alleged . . ., [defendant’s] software scans identification cards and photographs to locate facial images and extracts a unique numerical representation of the shape or geometry of each facial image, which [plaintiff] refers to as a ‘faceprint.’  The faceprints extracted by [defendant] plausibly constitute scans of face geometry and, therefore, ‘biometric identifiers’ under BIPA.”) (internal citations omitted).

The Court rejected the argument that the data cannot be a “scan of face geometry” because it did not involve the scan of plaintiff’s “actual face, but rather, a scan of a photograph of his face,” holding that “[n]othing in the BIPA’s text . . . supports [defendant’s] contention that a scan of face geometry must be an ‘in person’ scan.”  Id. at 14 (citation omitted).

Request For Liquidated Damages

The Court next turned to Defendant’s argument that Plaintiff’s request for liquidated damages should be dismissed because he failed to allege facts from which it reasonably could be inferred that Defendant negligently, recklessly, or intentionally violated BIPA.  The court held that Plaintiff need not plead Defendant’s state of mind to allege a BIPA claim and that dismissing Plaintiff’s request for liquidated damages was unwarranted because the request sought a particular remedy (which is “distinct from [plaintiff’s] underlying claim for relief based on BIPA”).  Id. at 18.

BIPA authorizes a prevailing party to recover, inter alia, the greater of actual damages or $1,000 in liquidated damages for each negligent BIPA violation and the greater of actual damages or $5,000 in liquidated damages for each intentional or reckless BIPA violation.  740 ILCS 14/20(1), (2).  Importantly, Plaintiff sought not only liquidated damages but also injunctive relief and relief in the form of reasonable attorneys’ fees, costs, and expenses — the latter forms of relief having no associated mental state requirement.  See Mem. Op. & Order at 19-20 (“Nor does [plaintiff] need to allege facts suggesting any level of culpability to plausibly state a BIPA claim in the first place,” as “[Plaintiff] may obtain injunctive relief or attorneys’ fees — as he has requested — regardless of whether [Defendant’s] actions are proven to be negligent, reckless, or intentional.”).

First Amendment

Finally, the Court addressed the argument that BIPA Section 15(b) — which requires a private entity to obtain informed consent before collecting an individual’s biometric data — violates the First Amendment as applied by restricting Defendant’s speech and its collection of “ information voluntarily provided by consumers to identify themselves as marketplace users.”  Id. at 24.  The court held that (1) Section 15(b) does not restrict defendant’s speech (meaning the First Amendment does not apply), and (2) even if Section 15(b) restricted defendant’s speech, it is a content-neutral restriction that survives the applicable level of First Amendment scrutiny (i.e., intermediate scrutiny).

In holding that Section 15(b) does not regulate Defendant’s speech, the Court reasoned that Section 15(b) “does not prohibit or otherwise restrict what a private entity may do with an individual’s biometric data once the data is obtained”; instead, Section 15(b) “regulates [D]efendant’s ability to obtain an individual’s biometric data by requiring [Defendant] to acquire the individual’s informed consent before doing so.”  Mem. Op. & Order at 24.  The Court relied on Dahlstrom v. Sun-Times Media, LLC, 777 F.3d 937 (7th Cir. 2015), where the Seventh Circuit held that the Driver’s Privacy Protection Act’s (the “DPPA”) “prohibition on obtaining information from driving records” did not restrict speech because it limited only “access to information.”  Mem. Op. & Order at 24 (citation omitted).  Sosa reasoned that “[l]ike the DPPA provision at issue in Dahlstrom, Section 15(b) burdens a party’s ability to access certain information.”  Id. at 25.

The Court further held that, even if Section 15(b) restricted Defendant’s speech, it would nonetheless survive intermediate scrutiny under the First Amendment.  The Court applied the four-prong intermediate scrutiny test set forth in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980): [1] First, courts ask whether the commercial speech concerns unlawful activity or is misleading (if so, the speech is not protected by the First Amendment); [2] if the speech concerns lawful activity and is not misleading, courts next ask whether the asserted governmental interest is substantial; [3] if it is, then courts determine whether the regulation directly advances the governmental interest asserted; and [4] finally, courts ask whether the regulation is more extensive than necessary to serve that interest.

Regarding the first step, the Court held that the at-issue commercial speech does not concern unlawful activity and is not misleading because Section 15(b) “regulates both the misleading and non-misleading collection of biometric data.”  Mem. Op. & Order at 31.  But the Court held that Section 15(b) passes muster under steps (2) through (4).  At the second step, the Court determined that Section 15(b) is supported by a substantial governmental interest — namely, the interest in protecting consumers’ rights to privacy in and control over their biometric data.  At the third step, the Court held that Section 15(b) directly advances the government’s interest because the harms identified by the Illinois legislature are real and Section 15(b) alleviates those harms “to a material degree.”  Id. at 33.  Finally, the court held that Section 15(b) is not more extensive than necessary to serve the government’s interest, as: (1) Section 15(b) “does not outright prohibit companies . . . from obtaining biometric data; it merely requires them to obtain informed consent before doing so”; and (2) “it is not too onerous to require a company that wants to collect a consumer’s sensitive and immutable biometric data to obtain the consumer’s consent before doing so.”  Id. at 35.

Conclusion

Sosa is one of several recent plaintiff-friendly BIPA decisions, and it reinforces the unanimous interpretation among courts to date that the BIPA can apply to data derived from photographs.  The Sosa decision also seemingly tends to undermine the defense argument that a BIPA plaintiff must allege facts demonstrating negligence, recklessness, or intent to state a claim and request liquidated damages under the statute.

Significant questions remain, however, regarding the BIPA’s application to companies that collect biometric information.  For one, the Court’s First Amendment analysis regarding Section 15(b) suggested that the same analysis might lead to the conclusion that claims brought under Sections 15(c) and/or 15(d) (which prohibit (i) profiting from biometric data and (ii) disclosing biometric data without consent, respectively) do violate the First Amendment.  See Mem. Op. & Order at 27 (noting that statutory provisions restricting the sale, disclosure, and use of information “undoubtedly restrict[] speech”).  Other important questions will be decided in appeals pending before the Illinois Supreme Court, including the question whether claims asserted under Sections 15(b) and 15(d) accrue only once upon the initial collection or disclosure of biometric information, or each time a private entity collects or discloses biometric information (see here), and the limitations period applicable to BIPA claims.

Moderator: Shawn Wood; Speakers: Talat Ansari, Kristine Argentine, David Bizar, Jonathan Braunstein, Tom Locke, Christopher Robertson, Caleb Schillinger, and Elizabeth Schrero

Seyfarth Synopsis: In this annual installment of Seyfarth Shaw’s Commercial Litigation Outlook, our nationally-recognized team provides keen insights about what to expect in 2022. It will be a busy year that will call upon clients and their counsel to be flexible, creative, and proactive on many fronts.

Specifically they will dive into the world of Insurance and how the focus is turning to increased protection for potential cyber and data breach incidents, as well as key trends in the following areas:

  • Trial Outlook
  • Antitrust
  • Consumer Class Action Defense
  • Consumer Financial Services Litigation
  • Health Care Litigation
  • International Dispute Resolution
  • Real Estate Litigation

The webinar will be on Wednesday, April 27, 2022
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
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By Jesse M. Coleman and Owen Wolfe

A federal court in Texas recently provided useful insights on what constitutes “solicitation” by a former employee under that employee’s restrictive covenant with his former employer, and the court provided further insights on what inferences courts will, and will not, draw in favor of a plaintiff seeking a preliminary injunction based on alleged misappropriation of trade secrets.[1]

The defendant worked for the plaintiff, Sunbelt, for over twenty years, primarily as a salesperson covering institutional customers.[2] As part of his employment, the defendant signed an employment agreement that, among other things, prohibited him from “solicit[ing]” Sunbelt’s customers or competing with Sunbelt within a certain geographic area.[3] He later left to join one of Sunbelt’s competitors. Sunbelt filed suit and sought a preliminary injunction, asserting that the employed had, among other things, solicited Sunbelt’s former customers, worked for Sunbelt’s competitor within the area prohibited by the non-competition agreement, and misappropriated Sunbelt’s trade secrets.[4]

In addressing Sunbelt’s motion for a preliminary injunction, the federal court first held that Sunbelt had established a likelihood of success on the breach of the employee’s non-competition provision, but that the alleged breach of the non-solicitation provision was a closer call. The court noted that what constitutes “solicitation” falls on a “spectrum,” ranging from active attempts by the former employee to cultivate new business, to communications initiated by the customer without any prompting from the former employee. The court stated that activity falling within “the middle of this spectrum may support a valid inference that the promise has violated a nonsolicitation agreement.”[5]

Here, however, the court refused “to draw the inference that [the defendant] likely violated the terms of the nonsolicitation restriction.” The court explained that although the defendant had waited until he resigned from Sunbelt to contact his former customers and did so using his personal cell phone, the defendant testified that he did not give the customers the name of his new employer, he gave them the contact information for his replacement at Sunbelt, and he had long-term personal relationships with several of these customers. The court held “these facts make the issue a close one” and that because the burden was on Sunbelt to establish its entitlement to the “extraordinary … relief” of an injunction, the close call should go in the defendant’s favor on this motion.[6]

The court was willing to some draw inferences in Sunbelt’s favor when evaluating its claim under the Texas Uniform Trade Secrets Act (TUTSA), however. The court determined that the defendant had customer-specific pricing information that “likely qualifies as trade secret” because of the steps Sunbelt took to keep the information confidential; the fact that the information would be valuable to Sunbelt’s competitors; and defendant’s act of forwarding the information to his personal email indicated that the information could “not be easily reproduced from memory nor obtained by legitimate means.” The court then inferred unauthorized use of this information based on the fact that the defendant held a sales role at Sunbelt’s competitor similar to his role at Sunbelt; there was evidence that the defendant accessed some of the information after beginning his employment with the competitor; and there was evidence that Sunbelt’s business with certain customers with whom the defendant interacted on behalf of his new employer had been reduced.[7] Despite drawing that inference in Sunbelt’s favor, the court declined to draw a similar inference regarding defendant’s possession of “customer lists and jobsite information,” finding that there was no evidence that the defendant had used this information when approaching Sunbelt clients.

This decision indicates that courts addressing restrictive covenant and trade secrets claims on a motion for a preliminary injunction will hold the plaintiff to its burden to demonstrate likelihood of success, and will draw inferences in the plaintiff’s favor only if supported by sufficient evidence. The court’s decision also suggests that what constitutes “solicitation” for purposes of a non-solicitation covenant is a complicated question that depends on the specific facts, circumstances, and context of each case.

[1] Sunbelt Rentals, Inc. v. Holley, 2022 WL 1049468 (N.D. Tex. Apr. 7, 2022).

[2] Id. at *1.

[3] Id.

[4] Id. at *2.

[5] Id. at *4 (italics in original).

[6] Id.

[7] Id. at *5.

By: Adam R. Young, Patrick D. JoyceJames L. CurtisMark A. Lies, II, and Craig B. Simonsen

Seyfarth Synopsis: The federal Occupational Safety and Health Administration has launched a National Emphasis Program to protect “millions of workers from heat illness and injuries. Through the program, OSHA will conduct heat-related workplace inspections before workers suffer completely preventable injuries, illnesses or, even worse, fatalities.”

Heat illness at the workplace has been growing as a target issue for federal OSHA for several years. Under the Biden Administration, a shift in federal OSHA’s focus to vulnerable worker populations and the effects of climate change has further highlighted occupational heat illness as a primary enforcement focus. As we previously blogged, the Agency is developing a heat illness standard applicable to General Industry and Construction, which the Agency anticipates will take months, if not years, to finalize. In the interim, OSHA continues to aggressively enforce indoor and outdoor heat illness hazards through the OSH Act’s General Duty Clause. On April 8, 2022 OSHA released a National Emphasis Program – Outdoor and Indoor Heat-Related Hazards, which provides the Agency’s policies and procedures with respect to targeted enforcement of heat hazards.

On April 12, 2022, Secretary Marty Walsh joined Vice President Kamala Harris in Philadelphia to announce a new enforcement program related to indoor and outdoor heat illness which, according to OSHA, affects thousands of indoor and outdoor workers each year. According to Walsh, reducing workplace heat-related illnesses and injuries is a “top priority for the Department of Labor, and this National Emphasis Program is a way to immediately improve enforcement and compliance efforts, while continuing long-term work to establish a heat illness prevention rule.”

Heat stress occurs when the human body is no longer able to control its internal temperature. Heat stress may lead to heat exhaustion and heat stroke. Symptoms of heat exhaustion include dizziness, headache, rapid pulse, nausea, and vomiting. The symptoms of heat stroke include high body temperature, confusion, and convulsions. Heat stroke can be fatal.

Heat stress may be avoided when working in a hot environment by drinking cool water frequently (whether thirsty or not), resting in the shade when cool down is needed, and by wearing a hat and light-colored clothing.

The National Emphasis Program (NEP) targets employers in certain “high hazard” heat illness industries based on NAICS code, including many outdoor services industries, indoor manufacturing environments, warehousing, and nursing care facilities. Using the enforcement guidance provided in the NEP, OSHA compliance officers will be expected to review certain key facets of an employer’s heat illness program to determine whether there may be a violation of OSHA’s General Duty Clause —

  • Is there a written program?
  • How did the employer monitor ambient temperature(s) and levels of work exertion at the worksite?
  • Was there unlimited cool water that was easily accessible to the employees?
  • Did the employer require additional breaks for hydration?
  • Were there scheduled rest breaks?
  • Was there access to a shaded area?
  • Did the employer provide time for acclimatization of new and returning workers?
  • Was a “buddy” system in place on hot days?
  • Were administrative controls used (earlier start times, and employee/job rotation) to limit heat exposures?
  • Did the employer provide training on heat illness signs in a language they understand, how to report signs and symptoms, first aid, how to contact emergency personnel, prevention, and the importance of hydration?

Employers would be wise to review this list, analyze their jobs for outdoor and indoor heat illness hazards, and develop a program to protect employees and address heat hazards.

The NEP also instructs compliance officers to interview workers on-site for subjective symptoms of heat illness such as headache, dizziness, fainting, or dehydration and to conduct personal observations looking for signs of heat illness at the jobsite. The NEP instructs compliance officers to conduct subjective observations of an employee’s “workload,” which, combined with the NEP’s heat index “trigger” of 80ºF, provides information as to the likelihood of employee exposure to the “hazard” of high ambient heat.

The NEP still leaves many unanswered questions as to what enforcement position OSHA will take when evaluating employer heat illness programs:

  • How should employers analyze and quantify different heat hazards posed by exposure to sunlight (solar radiation) and hard physical labor (metabolic heat)?
  • What is the proper schedule for rest breaks and how is that affected by work being outdoors or indoors?
  • What is the proper acclimatization schedule and how is OSHA/NIOSH’s proposed acclimatization affected by non-standard shift schedules (i.e., on for 10 days, off for 10 days), worker vacations, or even long holiday weekends?
  • Is access to cool water sufficient or will OSHA expect employers to provide access to electrolyte replacement beverages, tablets, or powders?
  • Will OSHA expect employers to provide employees with access to air conditioned or artificially cooled buildings or vehicles?
  • How should employers address hazards faced by high risk employees, given the medical inquiries that are prohibited by the Americans with Disabilities Act (ADA)?
  • What training will be provided to compliance officers to be able to determine the proper “workload” for each particular employee and job task?
  • On a multi-employer worksite, is the controlling employer required to confirm that its subcontractors have a heat illness prevention plan or that temporary workers have received the heat illness training from their staffing company? If so, what level of confirmation or follow up is necessary?

Several states have regulations or proposed regulations relating to heat illness or workplace temperature: California, Colorado, Maryland, Minnesota, Nevada, Oregon, and Washington. In Oregon, the Agency recently adopted Proposed Rules to Address Employee and Labor Housing Occupant Exposure to High Ambient Temperatures and Proposed Rules to Address Employee Exposure to Wildfire Smoke.

At federal OSHA there is also a Heat Illness Prevention campaign, launched in 2011, which educates employers and workers on the dangers of working in the heat. Through training sessions, outreach events, informational sessions, publications, social media messaging and media appearances, workers and employers learn how to protect workers from heat. Its safety message comes down to three key words: Water. Rest. Shade.

We have previously blogged on heat stress in the workplace. See OSHA Begins the Process to Issue Heat Illness Standard for Indoor and Outdoor Workplaces“Water. Rest. Shade.” OSHA Campaign to Prevent Heat Illness in Outdoor WorkersCool For the SummerAvoid the Summer Heat! Sweat the Details of California’s “Cool-Down” Periods and Avoid the Burn of Wage and Hour Class Litigation, and Cal/OSHA Drafts Rules for the Marijuana/Cannabis Industry and Heat Illness Prevention in Indoor Places of Employment.

For more information on this or any related topic please contact the author, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Adam R. YoungBradley D. Doucette, Bailey G. Green, and Craig B. Simonsen

Seyfarth Synopsis: According to the Centers for Disease Control and Prevention (CDC), drowsy driving is not just a major problem in the United States, it is a public health crisis. “Drowsy driving is the dangerous combination of driving and sleepiness or fatigue. This usually happens when a driver has not slept enough, but it can also happen because of untreated sleep disorders, medications, drinking alcohol, or shift work.”

As the country re-enters the workplace and re-incorporates a daily commute into its routine, and for workers who travel long distances as part of their employment, it is important to revisit the topic of sleep and occupational safety.

The Dangers of Drowsy Driving

The National Safety Council (NSC) notes that about 1 in 25 adult drivers report having fallen asleep while driving in the previous 30 days, and many more admit to driving when they were sleep-deprived. What drivers may not realize is how much drowsy driving puts themselves – and others – at risk. In fact, in recent years an estimated 6,400 people died annually in crashes involving drowsy driving, according to the National Sleep Foundation. The National Highway Traffic Safety Administration (NHTSA) estimates that drowsy-driving crashes approach nearly 100,000 each year per its most recent census.

Work needs and requirements may cause us to override those natural sleep patterns, often resulting in dramatic consequences on safety and productivity. The following list by the NSC illustrates a few facts for employers:

  • Safety performance decreases as employees become tired
  • Over 60% of night shift workers complain about sleep loss
  • Fatigued worker productivity costs employers $1,200 to $3,100 per employee annually
  • Employees on rotating shifts are particularly vulnerable because they cannot adapt their “body clocks” to an alternative sleep pattern

The NSC, NHTSA, and other traffic safety agencies such as the California Office of Traffic Safety (OTS) find that the drivers most at risk are commercial drivers (such as long-haul drivers, tow truck drivers, and bus drivers), graveyard shift workers, and employees on rotating or long shifts as well as drivers under the age of 25. In fact, studies show that driving drowsy is similar — in terms of slowed response time and judgment errors — to driving intoxicated, with 24 hours without sleep being roughly equivalent to having a blood alcohol content of .10%.

Some agencies have taken steps to limit drowsy driving, as well as the amount of hours employees can work. For example, the Federal Motor Carrier Safety Administration limits property-carrying drivers to a maximum of 11 hours after 10 consecutive hours off duty, and requires at least a 40-minute break every 8 hours. Passenger-carrying drivers have a stricter maximum of 10 hours after 8 consecutive hours of duty. These rules also take into consideration whether there are adverse driving conditions, and whether the driver has a sleeping berth.

Seyfarth has previously blogged on this topic as well. See DOT Publishes Proposed Changes to Hours of Service Regulations for Commercial Motor Vehicle Drivers, National Safety Council Congress Session on Driving Safety – The Missing Link in Your Company Safety and Health Management Systems, Asleep at the Wheel: Trucking Company’s Sleep Apnea Policy and Procedures Reviewed by Federal Courts, and DOT Proposes Rulemaking on “Safety Sensitive Positions” in Highway and Rail Transportation.

Federal OSHA maintains a guidance page relating to worker safety, sleep and fatigue.  While federal OSHA has no regulations relating to sleep deprivation and driving, the  agency enforces its General Duty Clause to maintain a safe workplace, and has issued citations to companies “when they ignored the human factor of employee fatigue from excessive overtime.”

What Employers Can Do

Besides adhering to Federal and state guidelines limiting the hours employees can work, there are a few steps which employers can implement to help curb drowsy driving and ensure employees are rested and driving safe behind the wheel. For workers who must drive as part of their job, OSHA recommends setting up a Safe Driving Program to keep employees safe on the road that includes formulating written policies and procures, driver agreements including seatbelt requirements and regular vehicle maintenance and inspection, and establishing regular driver training and communication. For all drivers, NIOSH recommends using a fatigue risk management system as well as setting policies for maximum numbers of overtime hours and consecutive shifts.

Employer Takeaway

Employee behavior on public roadways can have a big impact in terms of employee safety, public safety, and negative publicity for the employer. Employers should do an analysis of risks of drowsy driving and develop appropriate programs and training to develop a strong safety culture. Doing so will help employees stay awake, alert, and safe on the roads.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) or Workplace Policies and Handbooks Teams.