Client Alerts

The disruptions to the automotive supply chain caused by the cataclysmic events in Japan are likely to continue for some time and become increasingly severe. Even suppliers that are not directly or immediately affected likely will experience some disruptions to their supply chains as the difficulties encountered by many tier 2 and tier 3 suppliers continue to ripple upward. As OEM plants reduce their production schedules to contend with parts shortages, purchasing forecasts could be sharply reduced and, in some instances, even suspended, causing ripples back downstream. Buyers and sellers, OEMs and suppliers, with and without a physical presence in Japan, with direct supply relationships or multi-tiered relationships with Japan are absorbing the shocks. Prudent suppliers will proactively review their contractual rights and obligations at the earliest opportunity, before situations become critical.

Earlier this week, the United States Supreme Court yet again made it easier for employees to bring retaliation lawsuits against their employers. By a 6-2 decision (Justice Kagan did not participate), the Court held that oral complaints implicating the Fair Labor Standards Act ("FLSA") are covered by the Act's anti-retaliation protections.

When the Michigan Medical Marihuana Act ("MMMA") became law in 2008, Michigan employers were left wondering how the Act would affect their ability to maintain a drug-free workplace. Specifically, would the MMMA prevent an employer from disciplining or discharging an employee who violated company policy by testing positive for marijuana if the employee had a medical marijuana registry card? After two years of uncertainty, Michigan employers have finally received some much needed guidance.

When the Michigan Medical Marihuana Act ("MMMA") became law in 2008, Michigan employers were left wondering how the Act would affect their ability to maintain a drug-free workplace. Specifically, would the MMMA prevent an employer from disciplining or discharging an employee who violated company policy by testing positive for marijuana if the employee had a medical marijuana registry card? After two years of uncertainty, Michigan employers have finally received some much needed guidance.

One of the many bills that was passed in Michigan at the end of the year was the Property Assessed Clean Energy Act. ; This legislation allows local units of government to establish a Property Assessed Clean Energy Program. Under the Program, the local unit of government could enter into a contract with the property owner to finance energy efficiency improvements or renewable energy systems. "Energy efficiency improvements" is defined as equipment, devices, or material intended to decrease energy consumption, including, but not limited to, all of the following:

In the United States, corporations and their executives increasingly are being prosecuted and punished for criminal activity. On November 1, 2010, recent amendments to the United States Sentencing Guidelines went into effect that impact the severity of punishment in white-collar cases involving corporations and their executives. These amendments will increase or reduce the severity of a corporation's recommended sentence depending upon, among other things, the strength and effectiveness of its compliance program. The stronger and more effective the program, the less severe the recommended sentence will be. Conversely, a weak compliance program – or the lack of one – will result in a harsher recommended sentence. With the start of a new year, corporations should create or strengthen existing compliance programs now, so as to help reduce the severity of the recommended punishment under the Sentencing Guidelines, and more importantly, to increase the likelihood of avoiding a charge in the first place.

For years, the Michigan Payment of Wages and Fringe Benefits Act lagged behind the technologies available for how to pay employees. Specifically, unlike various other states' payment of wages statutes, the Michigan Act did not permit Michigan employers to require employees to receive their pay by direct deposit. Instead, an employee's consent to direct deposit had to be voluntary, and if an employee did not consent to direct deposit, then the employer had to issue a paper check to the employee.

Effective December 21, 2010, however, the Act was amended to permit, subject to certain conditions, the mandatory use of either direct deposit or a payroll debit card, which is also known as a payroll card or a paycard. This amendment means that an employee cannot insist on payment by the means of a paper check and that an employer can compel the use of direct deposit or payroll debit cards and can accordingly transition into a paperless payroll system with associated savings.

In the United States, corporations and their executives increasingly are being prosecuted and punished for criminal activity. On November 1, 2010, recent amendments to the United States Sentencing Guidelines went into effect that impact the severity of punishment in white-collar cases involving corporations and their executives. These amendments will increase or reduce the severity of a corporation's recommended sentence depending upon, among other things, the strength and effectiveness of its compliance program. The stronger and more effective the program, the less severe the recommended sentence will be. Conversely, a weak compliance program – or the lack of one – will result in a harsher recommended sentence. With the start of a new year, corporations should create or strengthen existing compliance programs now, so as to help reduce the severity of the recommended punishment under the Sentencing Guidelines, and more importantly, to increase the likelihood of avoiding a charge in the first place.

Butzel Long recently informed you that a package of bills reflecting significant amendments to Michigan's cleanup and liability protection laws passed the State House and Senate, and were awaiting the Governor's signature. Those bills were signed into law and became effective on December 14, 2010.

Two provisions of the new laws concern (a) self implementing cleanups and (b) letters that the Michigan Department of Environmental Quality ("MDEQ") (yes, effective January 4, 2011, it is back to being called DEQ) is now authorized to issue stating that there is no further response action required at a site. This alert provides a brief overview of these two new provisions.

One of the bills passed by the Michigan Legislature at the end of 2010 was a bill that expanded the state economic development programs to include green chemistry. The Michigan Economic Development Corporation ("MEDC") currently has in its "toolbox" the ability to provide certain grants, tax credits, and other benefits to companies in the high technology and new and developing energy sectors. One such program is the Centers of Energy Excellent Program to promote the development, acceleration, and sustainability of new and developing sectors in the energy field by making state grants available to companies as part of the Michigan Twenty-First Century Job Fund Initiative. The legislation also expands the definition of "high-technology activity" to include "green chemistry" for the purpose of receiving Michigan Economic Growth Act ("MEGA") tax credits against the Michigan Business Tax.

The definition of "green chemistry" includes "chemistry and chemical engineering to design chemical products or processes that reduce or eliminate the use or generation of hazardous substances, while producing high-quality products through safe and efficient manufacturing processes."

The UAW recently issued its “Principles for Fair Union Elections.” In 2011, the UAW plans to use these Principles in an effort to organize new members, initially at foreign-owned automotive companies and, if successful, then potentially at automotive supply companies and companies in other industries. The UAW has publicized the Principles as evidence that the UAW is less confrontational and more collaborative with employers, especially foreign-owned automotive companies.

For employers, particularly in the automotive industry – either foreign-owned automotive manufacturers or non-unionized automotive suppliers – the questions are whether an employer should accept or reject the Principles and what would be the consequences of either acceptance or rejection of the Principles.

NLRB Rules That Employer and Union Can Lawfully Negotiate Contract Terms Before The Union Represents A Majority of The Employers

The Patient Protection and Affordable Care Act ("Act") enacted on March 23, 2010 included a provision requiring insured group health plans (other than grandfathered health plans) to satisfy the nondiscrimination requirements of Internal Revenue Code ("Code") Section 105(h)(2). Prior to the Act, Code Section 105(h) only applied to self-insured health plans and required that they not discriminate in favor of highly compensated individuals as to eligibility to participate in the plan or in favor of highly compensated participants as to benefits available under the plan. The Act provided for the first time that insured group health plans comply with Code Section 105(h) under "rules similar to the rules" that applied to self-insured plans. In a Notice issued on December 22, 2010, the IRS has suspended application and enforcement of this rule for insured group health plans until regulatory guidance is issued.

Under the Act, an insured group health plan that failed to comply with the new nondiscrimination rules could have been subject to (1) an excise tax of $100 for each day of noncompliance with respect to each individual to whom such noncompliance relates (with certain exceptions), (2) in the case of a non-Federal governmental group health plan, civil money penalties under the Public Health Services Act of up to $100 per day per individual for each day the plan does not comply with the requirements (with certain exceptions), or (3) a civil action to enjoin a noncompliant act or practice or for other appropriate equitable relief under the Employee Retirement Income Security Act of 1974 ("ERISA").

The Employee Free Choice Act will not be enacted during the next two years. But the pro-union National Labor Relations Board will continue to issue rulings that will help unions organize new members.

The latest example of this NLRB trend is a decision involving Dana Corporation and the UAW. Dana Corporation, 356 NLRB #49 (2010). In a 2 to 1 decision, the NLRB ruled that Dana and the UAW, which represented Dana employees at 9 other facilities, did not violate federal labor law by entering a Letter of Agreement before the UAW represented the employees at a non-unionized Dana facility. The Letter was not even disclosed to the Dana employees whom the UAW wanted to organize.

On December 22, 2010, the National Labor Relations Board published, in the Federal Register, "Proposed Rules Governing Notification of Employee Rights under the National Labor Relations Act." For 60 days following December 22nd, members of the public may submit comments about these proposed rules to the NLRB.

These Proposed Rules confirm that the current NLRB will act aggressively to help labor unions.

On December 16, in a conference call which included U.S. Commerce Secretary Gary Locke, U.S. Patent and Trademark Office (USPTO) Director David Kappos and Michigan Governor Jennifer Granholm it was announced that the USPTO will locate its first Regional Patent Office in Detroit, Michigan. Employing 100 patent examiners at the outset, the regional office is scheduled to open sometime in 2011. In part, this move by the USPTO is intended to facilitate the hiring of additional qualified examiners and so reduce the present pendency of patent applications at the USPTO. According to Secretary Locke, the goal is to "get down to a 1 year review."

According to USPTO Director Kappos, the corps of examiners in the new Detroit Regional Office will represent, at least in part, technologies that mesh well with local industries, including automotive and emerging technologies.