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Agencies release risk advisory for businesses operating in Sudan
On May 23, the U.S. Departments of Treasury, State, Commerce, and Labor issued an advisory, Risks and Considerations for U.S. Businesses Operating in Sudan, highlighting growing risks to American businesses and individuals associated with conducting business with Sudanese State-Owned Enterprises. According to the advisory, the risks outlined come from recent actions undertaken by Sudan’s Sovereign Council and security forces under the military’s control and could adversely impact U.S. businesses, individuals, other persons, and their operations in the country and the region. The advisory also noted that the U.S. recently imposed sanctions on the Central Reserve Police (CRP) for serious human rights abuse under Executive Order 13818. As previously covered by InfoBytes, OFAC noted that, the “CRP has used excessive force against pro-democracy protesters peacefully demonstrating against the military-led overthrow of the civilian-led transitional government in Sudan.” As a result of the sanctions, all property and interests in property belonging to the sanctioned person subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC also noted that its regulations generally prohibit all dealings by U.S. persons that involve any property or interests in property of designated persons.
Agencies issue Burma advisory
On January 26, OFAC, along with Departments of State, Commerce, Homeland Security, Labor, and the Office of the U.S. Trade Representative, published a business advisory titled Risks and Considerations for Businesses and Individuals with Exposure to Entities Responsible for Undermining Democratic Processes, Facilitating Corruption, and Committing Human Rights Abuses in Burma (Myanmar), which informs the public of the heightened risks associated with conducting business in Burma, specifically business that involves the military regime. According to the announcement, since the military coup in 2021, the military has engaged in serious human rights abuse against the people of Burma. The specific entities and sectors of greatest concern for corruption and other illicit finance risks include, among other things, state owned enterprise and real-estate and construction projects.
Supreme Court blocks OSHA mandate
On January 13, a divided U.S. Supreme Court issued an order blocking a Department of Labor’s Occupational Safety and Health Administration (OSHA) rule mandating that employers with 100 or more employees require employees to be fully vaccinated or be subject to a weekly Covid-19 test at their own expense. However, in a separate order the Court allowed a separate rule issued by the Department of Health and Human Services requiring Covid-19 vaccinations for health care workers (unless exempt for medical or religious reasons) at Medicare- and Medicaid-certified providers and suppliers to take effect.
In November, the U.S. Court of Appeals for the Fifth Circuit issued a nationwide stay on the emergency temporary standard (ETS) that included the mandate to employers, describing enforcement of the ETS illegitimate and calling the OSHA rule “unlawful” and “likely unconstitutional.” (Covered by InfoBytes here.) However, last month, the 6th Circuit lifted the stay in a 2-1 ruling, stating that “[b]ased on [OSHA’s] language, structure and Congressional approval, OSHA has long asserted its authority to protect workers against infectious diseases.” (Covered by InfoBytes here.) The applicants, seeking emergency relief from the Court to reinstate the stay, argued that the rule exceeded OSHA’s statutory authority and is otherwise unlawful.
In agreeing that the applicants are likely to prevail, the Court majority granted the application for relief and stayed the OSHA rule pending disposition of the applicants’ petitions for review in the 6th Circuit, as well as disposition of any timely petitions for writs of certiorari. “Although Congress has indisputably given OSHA the power to regulate occupational dangers, it has not given that agency the power to regulate public health more broadly,” the majority wrote. Adding that the ETS is a “blunt instrument” that “draws no distinctions based on industry or risk of exposure to COVID-19,” the majority stated that the Occupational Safety and Health Act does not plainly authorize the rule.
The dissenting judges argued that the majority’s decision “stymies the Federal Government’s ability to counter the unparalleled threat that COVID–19 poses to our Nation’s workers. Acting outside of its competence and without legal basis, the Court displaces the judgments of the Government officials given the responsibility to respond to workplace health emergencies.”
With respect to the Department of Health and Human Services rule, the Government applied to stay injunctions issued by two district courts preventing the rule from taking effect. In granting the application and staying the injunctions, the majority of the Court found that one of the Department’s basic functions authorized by Congress “is to ensure that the healthcare providers who care for Medicare and Medicaid patients protect their patients’ health and safety,” concluding that “[h]ealthcare workers around the country are ordinarily required to be vaccinated for diseases” and that “addressing infection problems in Medicare and Medicaid facilities is what [the Secretary] does.”
In dissent, four justices argued that the efficacy or importance of Covid-19 vaccines was not at issue in assessing the injunctions, stating that the district court cases were about “whether [the Centers for Medicare and Medicaid Services] has the statutory authority to force healthcare workers, by coercing their employers, to undergo a medical procedure they do not want and cannot undo,” and arguing that “the Government has not made a strong showing that Congress gave CMS that broad authority.”
5th Circuit stays OSHA mandate
On November 12, the U.S. Court of Appeals for the Fifth Circuit issued a nationwide stay on the emergency temporary standard (ETS), which mandates that all employers with 100 or more employees require employees to be fully vaccinated or be subject to a weekly Covid-19 test. As previously covered by InfoBytes, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) published a rule in the Federal Register requiring employers to develop, implement, and enforce a mandatory Covid-19 vaccination policy, unless they adopt a policy requiring employees to choose between vaccination or regular testing for Covid-19 and wearing a face covering at work. The 5th Circuit stay, which was in response to a legal challenge filed by several states along with private entities and individuals, affirmed the court’s initial stay. According to the appellate opinion, OSHA’s enforcement of this ETS is illegitimate, calling it “unlawful” and “likely unconstitutional.” Furthermore, the 5th Circuit ordered OSHA to “take no steps to implement or enforce the Mandate until further court order.”
Dept. of Labor issues ETS on employer vaccinations
On November 5, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) published a rule in the Federal Register requiring employers to develop, implement and enforce a mandatory Covid-19 vaccination policy, unless they adopt a policy requiring employees to choose between vaccination or regular testing for Covid-19 and wearing a face covering at work. The emergency temporary standard (ETS) is for “employers with 100 or more employees—firm or company-wide,” which covers two-thirds of the nation's private-sector workforce. According to OSHA’s press release, the ETS requires employers to: (i) give paid time to workers to get vaccinated; (ii) permit paid leave for employees recovering from side effects; (iii) determine the vaccination status of each employee; (iv) acquire proof of vaccination from each vaccinated employee; (v) maintain records on each employee’s vaccination status; (vi) ensure each employee who is not fully vaccinated is tested for Covid-19 at least once a week, in certain circumstance; (vii) require employees to provide prompt notice after receiving a positive Covid-19 test or diagnosis; and (viii) ensure that each employee who has not been fully vaccinated working indoors or when occupying a vehicle with another person, for work purposes, wears a face covering. The ETS is effective immediately and “employers must comply with most requirements within 30 days of publication and with testing requirements within 60 days of publication.”
The same day, the Biden administration released a fact sheet clarifying the details of OSHA’s mandate. Specifically, the fact sheet noted that though the testing requirement will not take effect until January 4, 2022, employers must be in compliance with all other requirements, such as “providing paid-time for employees to get vaccinated and masking for unvaccinated workers,” by December 5.
OFAC issues advisory for China’s Xinjiang region
On July 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), along with the Departments of State, Commerce, Homeland Security, and Labor, as well as the Office of the U.S. Trade Representative, issued an updated advisory on the risks for businesses with possible exposure in their supply chain to entities involved in human rights abuses in the Xinjiang Region. The recent advisory updates the original version released in July 2020 (covered by InfoBytes here), which was issued after OFAC announced sanctions pursuant to Executive Order 13818 against a Chinese government entity and four current or former government officials for alleged corruption violations of the Global Magnitsky Human Rights Accountability Act. The updated advisory outlines risks to be considered when “assessing business partnerships with, investing in, sourcing from, or providing other support to companies operating in Xinjiang, linked to Xinjiang, or with laborers from Xinjiang.”
DOL Announces Intention to Delay Portions of Fiduciary Rule Exemptions
On August 9, the U.S. Department of Labor (DOL) filed a notice of administrative action in the U.S. District Court for the District of Minnesota as part of an ongoing lawsuit between the DOL and a wealth management firm. In the notice, the DOL said that it has submitted a proposal (text currently unavailable) to the Office of Management and Budget to delay the fiduciary rule’s second applicability date to July 1, 2019, instead of taking effect January 1, 2018 as previously announced (portions of the rule, however, took effect June 9, 2017). (See previous InfoBytes coverage here.) The rule—which expands the definition of who qualifies as a “fiduciary” under ERISA and the Internal Revenue Code—will allow for a delay of applicability under the proposal for certain exemptions, such as (i) “Best Interest Contract Exemption”; (ii) “Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs”; and (iii) “Prohibited Transaction Exemption . . . for Certain Transactions Involving Insurance Agents and Brokers, Pension Consultants, Insurance Companies, and Investment Company Principal Underwriters.”
DOL Announces No Additional Delay for Fiduciary Rule
On May 22, the U.S. Department of Labor (DOL) issued a news brief providing Fiduciary Rule guidance in anticipation of the upcoming June 9 partial effectiveness date. The Fiduciary Rule—a 2016 final rule expanding the definition of who qualifies as a “fiduciary” under ERISA and the Internal Revenue Code—will go into effect as planned with full implementation on January 1, 2018. DOL Secretary Alexander Acosta wrote in a Wall Street Journal op-ed that the Administrative Procedures Act, which governs federal rulemaking, would not allow a further delay. “We...have found no principled legal basis to change the June 9 date while we seek public input,” Acosta wrote. “Respect for the rule of law leads us to the conclusion that this date cannot be postponed.” The DOL’s release also includes Frequently Asked Questions, which provides clarification on the release dates of the provisions and related prohibited transaction exemptions. Although Acosta declined to authorize a further delay, he said that the DOL will continue its review of the final rule pursuant to the President’s February 3 Presidential Memorandum on Fiduciary Duty Rule. (See previous InfoBytes summary here.)
Notably, the DOL asserted that its general approach to implementation will be marked by an emphasis on compliance assistance (rather than citing violations and imposing penalties). Accordingly, during the phased implementation period, the DOL will not pursue claims against “fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions,” or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.
DOL Extends Fiduciary Rule Applicability Date by 60 Days
On April 4, the U.S. Department of Labor (DOL) issued a 60-day extension of the applicability dates of its “Fiduciary Rule”—a 2016 final rule expanding the definition of who qualifies as a “fiduciary” under ERISA and the Internal Revenue Code. The rule treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan or IRA as fiduciaries in a wider array of “advice relationships.” The extension also delays (by 60 days) the applicability of certain prohibited transaction exemptions. Accordingly, exemptions such as the “Best Interest Contract Exemption” and the “Principal Transaction Exemption” will become applicable on June 9, 2017. In its press release announcing the issuance of the final rule, the DOL noted, among other things, that the extensions are necessary to enable the DOL to perform the examination of the fiduciary rule directed by the President in his February 3 Presidential Memorandum (see previously posted InfoBytes summary regarding February 3 memo) to consider possible changes with respect to the fiduciary rule and related Prohibited Transaction Exemptions based on new evidence or analysis developed pursuant to the examination.
The 60-day extension was published in the Federal Register on April 7. As previously covered on InfoBytes, the DOL has released two sets of “frequently asked questions” about the Fiduciary Rule.
President Issues Executive Order to Study the DOL's Fiduciary Rule
On February 3, President Trump issued an Executive Memorandum directing the Department of Labor (DOL) to examine the Fiduciary Rule—an April 2016 DOL rule that expands the circumstances in which a person will be treated as a fiduciary under both ERISA and Section 4975 of the Internal Revenue Code by reason of providing investment advice to retirement plans and IRAs. In the memorandum, President Trump calls for an examination of the Fiduciary Rule to determine whether it (i) has harmed or is likely to harm investors; (ii) has resulted in dislocations or disruptions within the retirement services industry; and (iii) is likely to cause an increase in litigation and an increase in the prices that investors and retirees must pay to gain access to retirement services. If the Secretary of Labor makes any of these findings, the memorandum directs the Secretary of Labor to publish a proposed rule rescinding or revising the Fiduciary Rule. Initial compliance with the Fiduciary Rule is currently required by April 10, but the DOL has announced that it “will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”
- Keisha Whitehall Wolfe to discuss “Tips for successfully engaging your state regulator” at the MBA's State and Local Workshop
- Max Bonici to discuss “Enforcement risk and trends for crypto and digital assets (Part 2)” at ABA’s 2023 Business Law Section Hybrid Spring Meeting
- Jedd R. Bellman to present “An insider’s look at handling regulatory investigations” at the Maryland State Bar Association Legal Summit