If Your Cosmetics Use Fragrance or Flavor, this New California Legislation May Affect You

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If Your Cosmetics Use Fragrance or Flavor, this New California Legislation May Affect You
California cemented its status as the nation’s leader of cosmetics legislation when it passed the Cosmetic, Fragrance and Flavor Ingredient Right to Know Act of 2020 (“CFFIRKA”). Effective January 1, 2022, California’s newest cosmetic reporting law requires cosmetic companies to publicly disclose all fragrance and flavor ingredients in their products that are found on one of 22 “designated lists”. CFFIRKA supplements the state’s Safe Cosmetics Act (SCA), which for more than a decade has required companies to report to the California Department of Public Health (CDPH) Safe Cosmetics Program whether any of their cosmetic products contain chemicals known or suspected to cause cancer or reproductive toxicity. Now, the reporting requirements extend to fragrances and flavor ingredients that may pose health hazards.

Many cosmetic products contain fragrances or ingredients that give products flavor. In enacting CFFIRKA – a first-of-its-kind consumer “right-to-know law”, the state was concerned that some fragrance and flavor ingredients may have negative health effects, especially to those who are frequently exposed, such as salon workers. Thus, the new law is intended to provide the public with knowledge about the use of such fragrances and flavor ingredients in both retail and professional-use cosmetics, so consumers and workers can determine whether and how to mitigate their exposure.

Each entity whose name appears on the label of a cosmetic product must comply with CFFIRKA, which means companies such as distributors and importers may also have reporting obligations. CFFIRKA requires disclosure if a cosmetic product sold in California contains fragrance and/or flavor ingredients included on one or more of the 22 designated lists identified in California Health and Safety Code Section 111792.6. Among others, the lists include those chemicals on California’s Proposition 65 list as well as chemicals classified by other federal and state agencies and international bodies. The ingredients on the 22 designated lists are subject to change as each list is revised, requiring companies to pay special attention to such changes. All cosmetic products with reportable ingredients sold in California after January 1, 2022, regardless of date of manufacture, must be reported under this mandate. However, there is no requirement under CFFIRKA to make changes to product labels.

Additionally, cosmetic companies must disclose specific “fragrance allergens” if the allergens are present at or above 0.01 percent (100 parts per million) in rinse-off cosmetic products, or at or above 0.001 percent (10 parts per million) in leave-on cosmetics products. The subset of CFFIRKA reportable ingredients called “fragrance allergens” have distinct reporting requirements, and must be reported regardless of their intended purpose in the product (i.e. they must be reported even if they are not used to impart scent or counteract odor). In addition to disclosing the reportable fragrance, flavor, or allergen ingredients, businesses must also disclose each ingredient’s Chemical Abstracts Services (CAS) number, the Universal Product Code (UPC) of the cosmetic product that includes the ingredient, and whether the cosmetic product is intended for professional or retail cosmetic use.

Information reported by companies under CFFIRKA (as well as under the SCA) is made publicly available through the CDPH’s Safe Cosmetics Database, which is available at https://cscpsearch.cdph.ca.gov/search/publicsearch. To date, more than 90,000 cosmetic products have been reported to the CDPH.

Conkle Kremer & Engel attorneys stay current on regulatory and legal developments that affect the cosmetics business.

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14
DEC
0

Advertising and Labeling, Beauty Industry, California Trade Regulations, Manufacturing, Personal Care Products, Proposition 65, Regulatory Compliance, Safe Cosmetics Act, Safer Consumer Products Regulations, Sales, Uncategorized

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Annual PCPC Virtual Summit Features Conkle Firm Attorneys

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Annual PCPC Virtual Summit Features Conkle Firm Attorneys
Attorneys John Conkle, Zachary Page and Kim Sim helped lead off the first day of the Personal Care Product Council (PCPC)’s Virtual Summit on May 11, 2021 with a dynamic and timely presentation on the changing federal and state regulatory landscape for cosmetic and personal care products.  Consistent with the theme of the Virtual Summit – “Embracing the Future of Beauty” – they covered litigation trends in California and across the country in connection with product advertising and marketing claims, from the use of natural and clean/green claims such as “botanical” and “plant-based” to the use of “oil-free” and claims related to the “nourishment” and “revival” of hair.  They also spoke about other areas of the law uniquely affecting businesses as they navigated doing business during a global pandemic and preparing for a post-pandemic future, from privacy concerns to website accessibility, and issues related to product subscriptions and cause marketing.  These are areas that have taken on vital importance as businesses transition to e-commerce and consumers  increasingly focus their shopping online.

Conkle, Kremer & Engel’s presentation was featured in HBW Insight Informa Pharma Intelligence on May 13, 2021.  CK&E has been a frequent participant in other PCPC industry summits, but this year the three-day Virtual Summit was a seamless combination of the PCPC’s Annual Meeting and Legal & Regulatory Conference and marked the first time both events were combined into one and held entirely online.

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16
MAY
0

ADA - Americans with Disabilities Act, Advertising and Labeling, Beauty Industry, Brand Protection, California Organic Products Act, California Trade Regulations, Consumer Legal Remedies Act, Contracts, Business and Finance, Food, Craft Beer and Nutrition, Green Chemistry Initiative, Manufacturing, Personal Care Products, Regulatory Compliance, Safe Cosmetics Act, Safer Consumer Products Regulations

Can Employers Require Employees to be Vaccinated Against COVID-19?

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Can Employers Require Employees to be Vaccinated Against COVID-19?

As we have discussed in previous Coronavirus-related blog posts, employers have a general duty to provide a safe and healthy workplace that is free from serious recognized hazards where possible (meaning that such hazards are either nonexistent, eliminated, or reduced to a safe or acceptable level).  While most regions have tiered or priority programs in which newly-released COVID-19 vaccines will only be made available to certain age groups or industry sectors after higher-risk individuals are vaccinated, as the vaccines are made more widely available, “essential” employers and employers who may be planning to resume or increase the scope of their on-premises operations may see vaccination as an important tool to ensure the maximum level of safety within their workplaces.

These employers likely have many questions about COVID-19 vaccines, such as whether they may be able to require employees to be vaccinated against COVID-19 as a condition to being permitted at the workplace, how a vaccination program implicates disability and other related privacy issues and laws, and whether not requiring such vaccinations (or leaving it up to employees) could open them up to potential liability.

Addressing some of these concerns, the federal Equal Employment Opportunity Commission (EEOC) recently released guidance for employers regarding workplace vaccine mandates (see Section K). While the EEOC guidance does not make any blanket rule regarding the permissibility of mandatory vaccinations, it does give recommendations on how an employer should navigate the various concerns that arise in administering a vaccination program.  (But be aware that state health departments may release guidance or rules different from the EEOC and that union workers in particular may have collective bargaining agreements containing particular rules that must be taken into account.)

Vaccines are not Medical Examinations Under the ADA, but Employers Should be Careful with Inquiries Surrounding a Vaccine

The EEOC guidance initially provides that the administration of Coronavirus vaccines is not considered a “medical examination” under the Americans with Disabilities Act (ADA), but that employers should be careful when posing any pre-screening vaccination questions to their employees that might implicate the ADA’s rules regarding inquiries which are likely to elicit information about an employee disability.  Any pre-screening questions (i.e. to determine whether there is a medical reason that would prevent the employee from receiving the vaccine) must be job-related and consistent with business necessity – an employer must have a reasonable belief, based on objective evidence, that an employee that does not answer pre-screening questions and does not receive the vaccine will pose a direct threat to the health or safety of herself or others.  Though the EEOC has previously stated that “based on the guidance of the CDC and public health authorities […] the COVID-19 pandemic meets the direct threat standard,” this assessment may change moving forward, and an employer’s response to the “direct threat” concern will likely differ depending on industry and other workplace contexts.  In workplaces with significant worker density or customer contact, the threat is generally considered greater than in workplaces with limited interpersonal contact or the ability to work from home.  Under the guidance, these concerns apply equally to requests for an employee to show proof of a COVID-19 vaccine – the request by itself is not a disability-related inquiry, but any questions asking for reasons for not obtaining a vaccine may be.

The guidance identifies two circumstances in which disability-related screening questions can be asked of employees without needing to satisfy the “job-related and consistent with business necessity” requirement.  First, if the vaccination program is voluntary rather than mandatory, an employee’s decision to answer screening questions is also voluntary.  In such case, if an employee declines to answer screening questions an employer can decline to administer the vaccine, but the employer cannot retaliate against that employee in any manner for her decision.  The second circumstance is when employees receive an employer-required vaccination from a third party not under contract with the employer, such as a pharmacy.  However, the guidance cautions that any employee medical information obtained in the course of a vaccination program must be kept confidential by the employer, and that employers should advise employees not to provide medical information to the employer when providing proof of vaccination.

If an Employee Cannot Receive the Vaccine due to Disability or Religious Belief, Employers Must Try to Make Accomodations Where Feasible

Per the guidance, if an employee indicates that she is unable to receive a COVID-19 vaccination because of a disability, employers must conduct an individualized assessment of four factors in determining whether there is a direct threat to the health or safety of others in the workplace – the duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur, and the imminence of the potential harm.  An employer cannot exclude an unvaccinated employee from the workplace unless there is no way to provide a reasonable accommodation to that employee that will eliminate or satisfactorily reduce the threat without undue hardship to the employer.  If such a threat cannot be reduced to an acceptable level, the employer can forbid the employee’s physical presence at the workplace.  However, this does not mean the employer may automatically terminate the employee – in some cases, the employee may be able to work remotely or may be eligible to take leave under various Coronavirus-related legislation, state law, or the employer’s own policies.  Employers should be sensitive to accommodation requests by employees and should engage in an interactive process that takes into account the nature of the industry, the employee’s role, CDC or other health official guidance regarding the current prevalence and severity of Coronavirus outbreaks, and whether an accommodation poses significant expense or difficulty to the employer.

The same standards and practices apply if an employee’s sincerely held religious belief prevents the employee from receiving the vaccine – while an employer should assume that a professed belief is sincerely held, if there is an objective basis for questioning the claimed belief, the employer may be justified in requesting additional information.

Further, the guidance refers to FDA literature providing that particularly because the COVID-19 vaccine is available under an Emergency Use Authorization (EUA) instead of traditional FDA approval, any person may opt out of receiving the vaccine.  As such, even if it is unclear whether disability or religious concerns motivate an employee’s decision to decline a vaccine, an employer should still likely make whatever reasonable accommodations are possible based on individualized assessments of the four factors described above.

The Genetic Information Nondiscrimination Act (GINA) is not Implicated by Employer Administration of a Coronavirus Vaccine

The guidance provides that because the COVID-19 vaccines, even though they use mRNA technology, do not involve the use of genetic information to make employment decisions or require the employer’s acquisition or the employee’s disclosure of employees’ genetic information.  However, as with disability concerns, employers should be careful to avoid pre-screening questions that specifically seek to obtain “genetic information” about their employees, which can include information about family medical history.

Practical Impacts for Employers Based on the Guidance

Based on the foregoing, employers, depending on the industry and the threat that unvaccinated workers may pose in a particular workplace, may find it easier to encourage but not necessarily require Coronavirus vaccinations, and, if vaccinations are required, employers may find it easier to have employees obtain the vaccines from third parties rather than the employer administering the vaccines.  Employers who do decide to create a vaccination program should create a thoughtful, formal process that both demonstrates reasonable efforts to maintain a workplace free of “direct threats” given the context of the business and takes the various health and privacy-related laws into account.  Protocols should be well-documented, including pre-screening questions and opt-out situations but, again, documentation must be held confidentially and employee inquiries should be narrow.  In some industries (for example, the California health care industry), employers are required to offer certain vaccines to their employees free of charge (and to provide technical information to employees regarding the vaccine itself), though it is unclear whether that requirement would be expanded to all California employers with respect to the COVID-19 vaccine.

An employer with employees who decline to take the vaccine may wish to have those employees sign a statement acknowledging the risks to that employee in making that decision, similar to the declination statement required in health care workplaces in California, and/or a liability waiver.  The employer may also want to post prominent signage or bulletins in its workplace regarding its Coronavirus protocols (which is already required in many instances) that includes some manner of information about the business’ vaccination policy in order to allow customers and others who enter the premises to be informed.  While such documentation may not eliminate liability, it may help to reduce it.

As always, the law surrounding Coronavirus issues in the workplace is constantly evolving.  The foregoing is not intended to be an exhaustive representation of federal, state, and local laws and directives regarding COVID-19, but is rather general information about some of the EEOC’s latest positions and how employers might be able to utilize those positions in the context of the particulars of their own workplaces.  Employers should always consult with the experienced attorneys before taking steps to implement a vaccination policy.  Conkle, Kremer & Engel attorneys stay up to date and are ready to help employers understand and implement practices regarding the Coronavirus vaccine in their  particular workplace circumstances.

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23
JAN
0

ADA - Americans with Disabilities Act, Banking and Finance, Beauty Industry, Discrimination, Employment Law, Fashion, Food, Craft Beer and Nutrition, Industries Represented, Manufacturing, Real Estate & Construction, Regulatory Compliance, Sales, Technology

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ADA Lawsuits Attacking Website Accessibility Mount

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ADA Lawsuits Attacking Website Accessibility Mount

Over the past few months, we have seen an increase in pre-litigation letters and lawsuits charging Americans with Disabilities Act (“ADA”) violations against commercial websites. These notice and demand letters and lawsuits allege that businesses’ websites violate the federal ADA and similar state laws because they do not give full and equal access to individuals who have disabilities (including blindness, visual impairment and hearing impairment). ADA lawsuits have been filed in federal and state courts throughout the country. No state is immune from such suits, and no business is too small to receive such ADA demands and claims.

One of the factors undoubtedly is the rise of law firms, and consortiums of firms, that specialize in filing such suits. The law firms often work with repeat-plaintiffs with disabilities, much like law firms that specialize in Proposition 65 private enforcement claims in California who work with repeat plaintiffs who purchase products that are then made the subject of notices of violations and lawsuits. The subjects of ADA and Prop 65 laws differ greatly, but the common element is that liability can be fairly easy to establish under both ADA and Prop 65, and both statutes allow awards of attorneys’ fees to the law firms that can far exceed the damages awarded. Some of the law firms that commonly send ADA letters making demands and file lawsuits about website accessibility problems include Pacific Trial Attorneys (Newport Beach, CA), Nye, Stirling, Hale & Miller (Santa Barbara, CA), The Sweet Law Firm (Pittsburgh, PA), Block & Leviton, LLP (Boston, MA), and Carlson Lynch (Chicago, IL).

While there is no universally mandated standard, many large businesses and state and federal agencies follow WCAG 2.1, Level AA standards, which were created by the Web Accessibility Initiative, an internationally recognized organization. Generally, WCAG 2.1 Level AA compliance requires that websites have text components for all images and videos such that assisted technology software may read this content to users. Among other requirements, the standards also require that websites have proper contrast between background images and overlapping font so that visually impaired individuals can use assisting software to be able to read and navigate the website.

To minimize the risk of receiving an ADA violation letter or being sued, we recommend you take at least the following steps:

  1. Request that your digital team ensure and confirm that your website conforms with WCAG standards and, if so, what version/level as there were several earlier WCAG standards prior to the current WCAG version 2.1. To reduce the chances of such claims being made against your company, request your digital team to make your website WCAG 2.1 Level AA compliant and keep it that way until a more updated standard comes into general use.
  2. Add a footer entitled “Accessibility” or “Accessibility Statement” to your website. The footer should preferably appear on the homepage and each webpage, preferably near your “Privacy Policy” and “Terms of Service” footers.
  3. Add a webpage that is linked to the Accessibility Statement footer (e.g. https://www.conklelaw.com/accessibility-statement). This webpage should include an Accessibility Statement discussing your commitment to ensuring accessibility to all and providing contact information to report accessibility barriers and assistance with purchasing products or navigating the website. If you want help formulating your Accessibility Statement, seek qualified counsel to assist you.
  4. Instruct your digital team to periodically review the website as it is updated to ensure there are no access barriers, that all newly uploaded content (including temporary pop-up offers, sale announcements, discount codes, rebates, etc.) complies with WCAG standards, and that all customer service representatives are trained to handle website accessibility inquiries. This training should include advising a responsible person in your digital team of any reported accessibility barriers, and being specifically trained to help disabled customers place orders.

Even if you have not taken these steps before receiving a demand letter or lawsuit from one of the ADA plaintiffs’ lawyers, it’s possible to reduce liability by taking prompt steps. If you received such a website accessibility notice of violation or legal complaint, contact qualified counsel promptly to assist in minimizing the impact and avoid similar future claims. All of the ADA violation matters that Conkle, Kremer & Engel attorneys have defended have been resolved fairly quickly with modest settlements. Others accused of website ADA violations have not been so fortunate, with some reporting having paid tens of thousands of dollars. CK&E attorneys are well qualified to help with all types of ADA and accessibility compliance concerns, whether for websites or physical facilities.

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16
AUG
0

ADA - Americans with Disabilities Act, Banking and Finance, Beauty Industry, California Trade Regulations, Fashion, Food, Craft Beer and Nutrition, Industries Represented, Litigation, Arbitration and Mediation, Manufacturing, Real Estate & Construction, Regulatory Compliance, Sales, Technology

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2019 Was Another Lucrative Year For Prop 65 Bountyhunters

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2019 Was Another Lucrative Year For Prop 65 Bountyhunters

As recently featured in the Los Angeles Times, Proposition 65 continues to be big business for a handful of plaintiffs’ lawyers and their select group of clients, but it’s highly questionable how much benefit California residents and consumers receive.

According to settlement data released by the California Office of the Attorney General, in 2019, 909 businesses paid close to $30 million to settle Proposition 65 claims asserted against them. The average settlement payment was nearly $33,000. Of this staggering sum, almost $24 million, or 80%, went directly into the pockets of plaintiffs’ lawyers. In sharp contrast, the California Office of Environmental Health Hazard Assessment (OEHHA), which implements Proposition 65, received only about 11% of the settlement payments, or $3.3 million. The plaintiffs – so-called “private enforcers” – took a share of more than $2.7 million.

Proposition 65, otherwise known as California’s Safe Drinking Water and Toxic Enforcement Act of 1986, is a “right to know” law. Prop 65 requires businesses to provide “clear and reasonable” warnings for exposures to any one of the more than 900 chemicals on the Proposition 65 list that are known to cause cancer, reproductive harm or birth defects, before they can be sold in California. The obligation to warn can fall on all parties in the supply chain – manufacturers, producers, packagers, importers, suppliers, distributors and retailers. Businesses that fail to provide such warnings risk receiving a written “Notice of Violation”, a precursor to a Proposition 65 enforcement lawsuit.

Violations of Proposition 65 can cost businesses tens of thousands of dollars in civil penalties, the noticing party’s attorneys’ fees, and defense costs. The deck is stacked against the business alleged to be in violation: In general, all the noticing party has to show is an exposure to a listed chemical. The burden of proof then shifts to the business to show that no actionable exposure has occurred, which is a difficult burden to meet under the law and can require costly expert witnesses. Accordingly, most Proposition 65 cases settle either out-of-court in a private settlement agreement, or in court through a court-approved consent judgment.

One chemical, di(2-ethylhexyl phthalate) or DEHP, accounted for more than half of the 2019 settlements. DEHP, a phthalate, is on the Proposition 65 list as a chemical known to cause cancer and reproductive harm. DEHP is commonly used in plastics to make them flexible. According to OEHHA, DEHP can be found in various types of plastic consumer products, including some shower curtains, furniture and automobile upholstery, garden hoses, floor tiles, coverings on wires and cables, rainwear shoes, lunchboxes, binders, backpacks, plastic food packaging materials, and medical devices and equipment. In 2019, businesses settled claims over DEHP exposure from such products as cosmetic cases, goggles, gloves, erasers, hangers and bedding storage cases. The phthalate diisonoyl phthalate (DINP) and lead are two other chemicals that were the frequent subjects of 2019 settlements.

Proposition 65 claims in 2019 were again dominated by a small group of plaintiffs’ lawyers whose practices consist of sending out Notices of Violation and extracting settlements from businesses.

The private enforcers that have sent Notices of Violation this year include:

• APS&EE (represented by Law Offices of Lucas T. Novak)
• Anthony Ferreiro (represented by Brodsky & Smith, LLC)
• As You Sow (represented by Danielle Fugere and Chelsea Linsley of As You Sow)
• Audrey Donaldson (represented by Voorhees & Bailey, LLP)
• Berj Parseghian (represented by KJT Law Group PLC)
• Brad Van Patten (represented by Law Offices of George Rikos)
• CA Citizen Protection Group, LLC (represented by Khansari Law Corporation and Blackstone Law)
• Center for Environmental Health (represented by Lexington Law Group)
• Clean Label Project (represented by Davitt, Lalley, Dey & McHale, PC)
• Consumer Advocacy Group, Inc. (represented by Yeroulshalmi & Yeroulshalmi)
• Consumer Protection Group, LLC (represented by Blackstone Law)
• Dennis Johnson (represented by Voorhees & Bailey, LLP)
• Ecological Alliance, LLC (represented by Custodio & Dubey LLP)
• Ecological Rights Foundation (represented by Law Offices of Brian Gaffney)
• Ema Bell (represented by Brodsky & Smith, LLC)
• Environmental Health Advocates, Inc. (represented by Nicholas & Tomasevic LLP and Glick Law Group)
• Environmental Research Center, Inc. (represented by Michael Freund & Associates, Law Office of Richard M. Franco and Aqua Terra Aeris Law Group)
• EnviroProtect, LLC (represented by Kawahito Law Group APC)
• Erika McCartney (represented by Environmental Law Foundation)
• Evelyn Wimberley (represented by Law Offices of Stephen Ure, PC)
• Gabriel Espinoza (or Gabriel Espinosa) (represented by Brodsky & Smith, LLC)
• Keep America Safe and Beautiful (represented by Custodio & Dubey LLP and Sy & Smith, PC)
• Key Sciences, LLC (represented by Kyle Wallace and Davitt, Lalley, Dey & McHale)
• Kim Embry (represented by Nicholas & Tomasevic LLP and Glick Law Group)
• Kimberly Ann Harrison (represented by Law Office of Rick Morin, PC)
• Laurence Vinocur (represented by The Chanler Group)
• Mary Elizabeth Romero (represented by Agency D&L)
• Maureen Parker (represented by Law Offices of Stephen Ure, PC)
• My Nguyen (represented by Seven Hills LLP)
• Paul Wozniak (represented by The Chanler Group)
• Precila Balabbo (represented by Brodsky & Smith, LLC)
• Public Health and Safety Advocates, LLC (represented by Law Offices of Danialpour & Associates)
• Ryan Acton (represented by O’Neil Dennis)
• Sara Hammond (represented by Joseph D. Agliozzo, Law Corporation)
• Shefa LMV, Inc. (represented by Law Office of Daniel N. Greenbaum)
• Susan Davia (represented by Sheffer Law Firm)
• Tamar Kaloustian (represented by KJT Law Group PLC)
• The Chemical Toxin Working Group, Inc. (represented by Khansari Law Corporation)
• Zachary Stein (represented by KJC Law Group APC)

Businesses should be aware of and ensure compliance with Proposition 65’s requirements if their products are sold in California. In the event a Notice of Violation is received, businesses should contact qualified legal counsel. Conkle, Kremer & Engel attorneys are highly experienced in defending businesses against Proposition 65 claims as well as counseling businesses on compliance, in order to minimize the risk of enforcement actions.

2019 Prop 65 By the Numbers:

• 1,000: Notices of Violation Served
• 909: Number of Settlements/Consent Judgments
• $29.7 Million: Paid by Businesses to Resolve Claims
• $23.7 Million: Attorneys’ Fees & Costs Collected by Noticing Parties’ Attorneys
• $2.7 Million: Payments Collected by Noticing Parties
• $3.3 Million: Payments to OEHHA
• $32,706: Average Settlement/Judgment Amount

The number of enforcement actions in 2019 was not a fluke. Similar numbers have been accumulated in prior years. Just in the first few months of 2020, a considerable number of new enforcement actions have been pursued. 2020 Prop 65 enforcement actions will be reviewed in an upcoming blog post.

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27
JUL
0

Banking and Finance, Beauty Industry, California Trade Regulations, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Personal Care Products, Proposition 65, Real Estate & Construction, Sales, Technology

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New SBA Rule Clarifies PPPFA Loan Forgiveness

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New SBA Rule Clarifies PPPFA Loan Forgiveness

We previously posted about the Paycheck Protection Program Flexibility Act (“PPPFA”), which updated the Paycheck Protection Program (“PPP”) to provide loan recipients with more flexibility. When we posted, we noted that questions remained about how the important loan forgiveness aspect of the PPP would work under the new flexibility rules. The Small Business Association, in connection with the Treasury, has now issued further guidance that provides some greater clarity.

The PPPFA expanded the covered period, for all borrowers who received their PPP loans on or after June 5, 2020, from the original 8 weeks to 24 weeks (or December 31, 2020, whichever is earlier). Loan recipients who obtained PPP loans before June 5, 2020 could elect either the 8 or the 24 week covered period. The “covered period” refers to the time during which the borrower must use the loan for PPP’s allowed costs, notably payroll, rent and utilities.

The text of the U.S. Treasury Department’s earlier Interim Final Rule stated that a loan recipient must wait until the covered period ended before applying for loan forgiveness. The updated Interim Final Rule states that a loan recipient may apply for loan forgiveness anytime during its covered period as long as it has already expended the entirety of its PPP loan. For example, if a loan recipient elects the 24 week covered period and expends all of its PPP loan funds by week 10, it may apply for loan forgiveness immediately rather than wait until week 25. Remember, though, that the last day to file for loan forgiveness remains 10 months after the end of the loan recipient’s covered period.

While loan recipients have the ability to apply for loan forgiveness immediately after expending its PPP loan, the 10 month window provides flexibility to apply for loan forgiveness at the most opportune moment. The loan forgiveness application requires loan recipients to provide information about any decreases in workforce and reductions in wages/salary. Those changes in workforce will result in a corresponding decrease in the amount of loan forgiveness for which the loan recipient is eligible.

If a loan recipient believes that, within a few months, it will be able to hire or re-hire employees and return wages/salary to “pre-COVID-19” levels, then waiting to fill out the loan forgiveness application may be prudent. On the other hand, if the loan recipient anticipates future layoffs and compensation cuts, then applying sooner would be advantageous to avoid loan forgiveness reductions. But keep in mind that December 31, 2020 is the last day for a loan recipient to return its workforce to the requisite levels in order to receive full loan forgiveness.

Conkle, Kremer & Engel attorneys will continue to monitor the COVID-19 relief program landscape for updates to guide clients.

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30
JUN
0

Banking and Finance, Beauty Industry, Coronavirus and COVID-19 Regulations, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Real Estate & Construction, Sales, Technology, Uncategorized

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Conkle Firm Q&A About Coronavirus Effects in Beauty Industry Report

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Conkle Firm Q&A About Coronavirus Effects in Beauty Industry Report

Conkle, Kremer & Engel attorney Eric Engel appeared in a recent Q&A concerning COVID-19’s effects and predictions for the personal care products business in Beauty Industry Report COVID-19 Special Report. Readers were reminded that, as they adapt and plan, they must remember and respect the classic issues such as correct labor and employment practices that are not changed by the crisis. If anything, the contract and labor disruptions of the emergency conditions will exaggerate those issues if they are forgotten in the rush to adapt and reopen business.

CK&E attorneys stay current on developments in the coronavirus pandemic, while being watchful for the kinds of issues that can undermine clients, to help clients adapt and thrive in challenging business environments.

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30
JUN
0

Beauty Industry, Coronavirus and COVID-19 Regulations, Employment Law, Personal Care Products, Uncategorized

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The California Consumer Privacy Act (“CCPA”) Is Enforceable Beginning July 1, 2020. Is Your Business Ready?

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The California Consumer Privacy Act (“CCPA”) Is Enforceable Beginning July 1, 2020. Is Your Business Ready?

You may have noticed a recent influx of personal emails about updates to businesses’ privacy policies and terms and conditions. This may be due, in part, to the California Consumer Privacy Act (“CCPA”) allowing individuals to bring private rights of action against businesses. While the CCPA was effective January 1, 2020, it will be enforceable by the California Attorney General beginning July 1, 2020.

What is the CCPA?

The CCPA grants California consumers the right to control the personal information that businesses collect about them. Through the CCPA, California residents have the right to know what personal information is being collected, whether their personal information was sold or disclosed (and to whom), and may request that businesses delete their personal information. Under the CCPA, personal information is any data that identifies, relates to, or describes a particular person or household. Information such as a person’s name, address, and email address (even a computer IP address) are considered personal information. This applies to information collected online and offline, so the CCPA may apply to businesses even if they do not have a website.

Not all businesses need to comply.

The CCPA applies to for-profit businesses that collect consumers’ personal information and meet one or more of these criteria:

(1) The business has an annual gross
revenue in excess of $25M;

(2) The business collects, buys,
receives, sells, or shares the personal information of 50,000 or more
California-resident consumers, household, or devices; or

(3) The business derives 50% or more of
its annual revenue from selling consumers’ personal information.

Even small consumer-oriented businesses should take particular note of the second criteria: If the business’ website collects what the Act classifies as “personal information,” such as email addresses or the IP Address of the computer accessing the website, it may not take very long to collect that kind of information about 50,000 California-resident devices or consumers and make the business subject to the Act.

Upon receiving a verified consumer request, businesses meeting any of the above-mentioned criteria must give California residents the means to exercise their rights under the CCPA and cannot discriminate against them for exercising these rights. Businesses must complete the consumer’s request within 45 days, although an extension of time may be available, and the process of responding to consumer requests must be supported by reasonable security procedures and practices.

What happens if a business does not comply?

A failure to cure any alleged violation of the CCPA within 30 days of notification of alleged noncompliance will subject businesses to an injunction and civil penalties of no more than $2,500 per violation or $7,500 per intentional violation. And if personal information is improperly disclosed or stolen due to the absence of reasonable security procedures and practices, businesses may be subjected to civil action for injunctive or declaratory relief, damages of $100 to $750 per consumer, per incidentor actual damages (whichever is greater), or any other relief that the court deems proper.

Are you ready to comply with the CCPA? Attorneys at Conkle, Kremer & Engel are staying current with the CCPA to guide their clients through compliance.

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26
JUN
0

Banking and Finance, Beauty Industry, California Trade Regulations, Fashion, Food, Craft Beer and Nutrition, Industries Represented, Manufacturing, Real Estate & Construction, Regulatory Compliance, Sales, Technology

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PPP Flexibility Act’s Changed Timing and Terms of Loan Forgiveness

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PPP Flexibility Act’s Changed Timing and Terms of Loan Forgiveness

We have previously posted about the Paycheck Protection Program (“PPP”) that was created by the U.S. Coronavirus Aid, Relief, and Economic Security (CARES) Act. Like many rushed legislative programs, PPP had issues from the outset. Enter the Paycheck Protection Program Flexibility Act of 2020 (“PPPFA”), signed on June 5, 2020 to amend some parts of the CARES Act that pertain to the PPP. UPDATE: As of July 4, 2020, the PPP program remains open to new applications through August 8, 2020, and there were $130 Billion in funds remaining to be claimed by employers of almost all sizes. (Read on for more on that.)

The Small Business Association, in conjunction with the Treasury, issued an Interim Final Rule conforming its previous rule to the PPPFA and attempting to clarify some key points. As described below, some important questions under the PPPFA remain unanswered even by the new Interim Final Rule.

The most obvious purpose of the PPPFA is to extend the “covered period” in which PPP funds can be expended on allowed costs, such as payroll, rent and utilities. Whereas the PPP loans were limited to an 8 week “covered period” of expenses, the PPPFA extends the covered period to 24 weeks, or until December 31, 2020, whichever comes first. This extension applies to all PPP loans that originated after June 5, 2020, but employers who took loans prior to that date have an option to maintain the original 8 week period or extend to the 24 week covered period.

The election between the 8 week covered period and the 24 week covered period will have significant ramifications for earlier loan recipients. The election between an 8 week covered period or a 24 week covered period is binary, and only funds spent during the elected covered period may be counted toward loan forgiveness. A loan recipient may not, for example, choose a 16 week covered period, but there does not appear to be anything restricting a loan recipient from electing a 24 week covered period but spending all the PPP funds in 16 weeks, for example.

The text of the PPPFA does not prevent a loan recipient from applying for loan forgiveness at any time that its PPP funds have been exhausted on covered expenses, or alternatively waiting up to 10 months after the expiration of the coverage period. However, the language of the Treasury Department’s Interim Final Rule implies that a loan recipient must wait until its covered period has ended before applying for loan forgiveness. Hopefully, the Treasury Department will clarify this soon, particularly because the date of the employer’s Loan Forgiveness Application can be important.

Employers should recall from our earlier post that if employees or wages are too drastically cut, there will be a reduction of the amount of loan forgiveness the employer will receive under PPP. So the date on which that measurement is made may be very significant if the employer’s workforce or salaries have changed. At present it appears that the SBA will measure workforce and salary levels as of the date of the Loan Forgiveness Application or December 31, 2020, whichever comes first, and will compare that against the employer’s average payroll during the original measurement period of February 15 to April 26, 2020. There remains some possibility that the SBA will require that the same level of employees and wages also be maintained as of December 31, 2020, but if so exactly how that might work is not clear and should be the subject of further Treasury Department rulings.

If the employer has had layoffs or wage cuts, PPPFA extends the date by which loan recipients must rehire full time equivalent employees and eliminate salary/wage cuts from the previous deadline of June 30, 2020 to December 31, 2020. Failure to rehire and restore wages will result in a decrease of the amount of loan forgiveness for the employer. But if a loan recipient can show in good faith (a) an inability to rehire individuals who were employees of the eligible recipient, and (b) an inability to hire similarly situated qualified employees, by the December 31, 2020 deadline, there will be no corresponding reduction in loan forgiveness for failure hire/re-hire such employees. It is not yet clear whether this same exception may apply to salary/wage cuts. Whether the deadline has any impact if a loan forgiveness application was made prior to this last day has yet to be explained by the Treasury Department.

Loan recipients now have up to 10 months from the date the covered period ends to apply for loan forgiveness. Failure to do so within the 10 months allowed will result in denial of loan forgiveness and the loan recipient must repay principal, interest and fees on the loan. If the loan is not forgiven, its term is now 5 years for all loans originating on or after June 5, 2020. Earlier loans retain a 2 year term, but lenders and loan recipients are free to agree to amend the duration to 5 years.

Another prominent feature of the PPPFA is that loan recipients must use 60% of the loan amount for payroll in order to be eligible for loan forgiveness, whereas the original PPP required 75% of the proceeds to be used for payroll. The PPPFA appears to make this 60% standard absolute – if it is not met, then there will be no loan forgiveness. But the U.S. Treasury Department’s Interim Final Rule, and the revised Loan Forgiveness Application, appears to disagree and instead provides that if a loan recipient does not use at least 60% of the loan amount for payroll, then the loan forgiveness will be decreased proportionately with the shortfall of expenditures on payroll. This interpretation is more in line with the original PPP’s standard, but it remains uncertain whether the U.S. Treasury Department can effectively impose this standard over statutory language that appears to say otherwise.

As the name of the Paycheck Protection Program Flexibility Act suggests, and as the Interim Final Rule explicitly states, the goal of the PPPFA is to provide employers with more flexibility when using PPP loan funds. Because $130 Billion in allotted loan funds went unclaimed at the end of the original and once-extended application period, on July 4, 2020 President Trump signed Congress’ unanimously-approved amendment to extend the last day to apply for any PPP loan to August 8, 2020.

The updated and revised PPP loan application can be found here. Conkle, Kremer & Engel attorneys stay current on the latest amendments in order to help business clients navigate the maze and maximize the benefits available to them under PPP loans and other government COVID-19 relief programs.

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Banking and Finance, Beauty Industry, Coronavirus and COVID-19 Regulations, Fashion, Food, Craft Beer and Nutrition, Industries Represented, Manufacturing, Real Estate & Construction, Sales, Technology

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Limiting Risks When Reopening Your Business After COVID-19 Shutdown

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Limiting Risks When Reopening Your Business After COVID-19 Shutdown

Many businesses are understandably eager to resume operations as the restrictions to prevent the spread of the novel coronavirus loosen. Beginning in the second week in May 2020, businesses in some sectors of California’s economy were permitted to reopen, as the state entered Stage 2 of Governor Gavin Newsom’s plan to reopen the economy.

As the state continues its efforts to slow the spread of COVID-19 pandemic, the reality is that businesses will look very different when they reopen. While taking reasonable steps to prevent illness in the workplace is always advisable practice, it is paramount now. As businesses reopen, they must ensure that they are taking all necessary precautions to protect the health and safety of their employees, customers, and visitors. In doing so, businesses may well protect themselves from exposure to liability down the road.

STAY CURRENT AND DEVELOP A PLAN FOR BUSINESS REOPENING

Businesses should closely monitor government directives related to COVID-19 at the federal, state and local level, and ensure they are in compliance. Being out of compliance with current recognized legal standards is a sure invitation to liability claims if someone can show they were injured as a result.

GUIDANCE FROM OSHA AND THE CDC

As a foundation, businesses must follow existing Occupational Safety and Health Administration (OSHA) standards during the pandemic, such as the General Duty Clause, Section 5(a)(1), of the Occupational Safety and Health Act, which states that all workers must be provided workplace that is safe and free of hazards. In addition, OSHA has released guidelines for businesses to reduce the risk of infection in the workplace posed by COVID-19.

OSHA is also closely coordinating with CDC, NIOSH and other agencies on proper safety precautions. The CDC has issued Guidance on Disinfecting the Workplace (specifically after a suspected or confirmed case of COVID-19). For instance, routine cleaning of commonly used areas is crucial to preventing the spread of COVID-19 in the workplace. However, areas that have not been used in a week or more require only routine cleaning. Employers should check the CDC and OSHA websites often for guidance to make sure their business has the most updated guidance on PPE and other safety measures.

STATE-LEVEL GUIDANCE

According the state’s guidance on Stage 2 of reopening Before reopening, all facilities must:
• Perform a detailed risk assessment and implement a site-specific protection plan
• Train employees on how to limit the spread of COVID-19, including how to screen themselves for symptoms and stay home if they have symptoms
• Implement individual control measures and screenings
• Implement disinfecting protocols
• Implement physical distancing guidelines

California has also issued industry-specific guidance relevant to the businesses of many of our clients:
“Logistics and Warehousing Facilities” –
• COVID-19 INDUSTRY GUIDANCE: Logistics and Warehousing Facilities
• COVID-19 General Checklist for Logistics and Warehousing Employers
“Manufacturing” –
• COVID-19 INDUSTRY GUIDANCE: Manufacturing
• Cal/OSHA COVID-19 General Checklist for Manufacturing Employers
“Office Workspaces” –
• COVID-19 INDUSTRY GUIDANCE: Office Workspaces
• Cal/OSHA COVID-19 General Checklist for Office Workspaces

LOCAL STAY-AT-HOME ORDERS

The Safer at Home order covering businesses in Los Angeles County, which remains in effect for an indeterminate time, requires that all “Essential Businesses” (and, by extrapolation, other businesses that are allowed to open in some capacity):
(1) Provide employees with, and all employees are required to wear, a cloth face covering when performing their duties requires that they be around others;
(2) Practice social distancing by requiring patrons, visitors, and employees to be separated by six feet, to the extent feasible;
(3) Provide access to hand washing facilities with soap and water and/or hand sanitizer; and
(4) Post a sign in a conspicuous place at the public entry to the venue instructing members of the public not to enter if they are experiencing symptoms of respiratory illness, including fever or cough.

CONDUCT AN INDUSTRY-SPECIFIC RISK ASSESSMENT

• Walk through the workplace and observe it in its usual state during different phases of business activity.
• Rate all risks found as high, medium, and low risk, and address the risks accordingly.
• Regularly evaluate the office workspace for compliance with the plan and document and correct deficiencies identified.
• Investigate any COVID-19 illness and determine if any work-related factors could have contributed to risk of infection. Update the plan as needed to prevent further cases.

ADAPT YOUR IDER PLAN TO SAFELY REOPEN

Business will change after reopening, and business have to adapt accordingly. While a business cannot be expected to ensure prevention of infection with COVID-19 in its workplace, it is strongly advisable to institute and follow reasonable safety measures as part of an Infectious Disease Emergency Response Plan (IDERP). Once the business has developed a plan to protect its workers, it must then be effectively communicated to employees. The employer should post a notice of these policies in a conspicuous location in the workplace.

Part of this plan entails assessing current protocols to accommodate social distancing policies, such as:
• Require those employees that can work from home to do so; Helpful to categorize jobs classified as low, medium, high, and very high exposure risk.
• Provide hand sanitizer and schedule frequent cleaning to sanitize common areas in the workplace (such as door knobs, keyboards, the break room, etc.).
• Discourage workers from using other workers’ phones, desks, offices, or other work tools and equipment, as much as possible.
• Limit non-essential visitors and establish screening policies for essential visitors

COMMUNICATE THE PLAN TO EMPLOYEES AND MAKE IT AVAILABLE TO CUSTOMERS

• Train managers and supervisors to recognize COVID-19 symptoms, the precautions that will be implemented to prevent infection, and how to response to emerging employee/customer infection.
• Inform and encourage employees to self-monitor for signs and symptoms of COVID-19 if they suspect possible exposure.
• Instruct managers, supervisors and employees on use of PPE, cleaning schedules and sanitizing techniques, and what to do if exposure is suspected.
• Have a summary of the plan posted or available to customers on request.
• Address when employees are fearful to come into work because of the risk of contracting COVID-19 by discussing the IDER Plan that has been implemented.

VERIFY ALL NEW AND RETURNING PERSONNEL’S HEALTH AND ABILITY TO WORK

• Utilize a basic Health Questionnaire each day an employee reports to work.
• Consider implementing pre and post work shift temperature checks. Employees should not be permitted to work with temperatures over 100.4°F. The EEOC has confirmed that measuring employees’ body temperatures and/or testing for COVID-19 does not run afoul of the employee privacy protections provided in the Americans with Disabilities Act (“ADA”), but the results must be kept confidential. (Note that body temperature is not completely reliable, as some carriers of the virus do not exhibit fever symptoms.) The EEOC has not addressed antibody testing to date.
• Be certain to avoid discriminatory practices in the Health Questionnaire and health screening of employees.

WHAT IF AN EMPLOYEE TESTS POSITIVE FOR COVID-19 AFTER REOPENING?

The business’ IDERP should include protocols for how the business will respond if an employee test positive for COVID-19.
• Develop policies and procedures from prompt identification and isolation of sick workers (The CDC Guidance on Disinfecting the Workplace specifically addressed safety measures after a suspected or confirmed case of COVID-19).
• Until at least July 6, 2020, California presumes a COVID-19 infection was acquired at work if it was diagnosed, or a positive test occurs, within 14 days after any worksite appearance. While the presumption can be rebutted in theory, in effect this means that active employees will almost always receive workers compensation benefits and treatment for COVID-19 infections. Be sure to follow normal workers compensation procedures as you would for any other workplace injury or illness.
• EEOC guidelines allow employers to ask if employees are experiencing recognized symptoms of COVID-19 (fever, cough, shortness of breath, sore throat). Employers must maintain that information in confidence as a medical record – information about an employee’s symptoms may be protected by ADA or HIPPA.
• Once the employer has good faith reason to believe an employee has a suspected or confirmed case of COVID-19, the employee should be required to stay out of the workplace for a 14-day period or until cleared by a doctor’s note or alternative, such as a negative COVID-19 test report. This policy must be applied in a non-discriminatory fashion, not applied only against selected individuals.
• The employer must advise other employees who may have contact with the affected person, without identifying the affected employee, to protect that employee’s privacy. The employer must take steps to prevent harassment or discrimination against those suspected of having COVID-19.

DEVELOP CONTINGENCY PLANS IN THE EVENT OF AN OUTBREAK

Businesses would be wise to develop contingency plans to prepare for scenarios which may arise as a result of outbreaks, such as:
• Increased rates of worker absenteeism.
• The need for social distancing, staggering work shifts, downsizing operations, delivering services remotely, and other exposure-reducing measures.
• Options for conducting essential operations with a reduced workforce, including cross-training workers across different jobs in order to continue operations or deliver surge services.
• Options for interrupted supply chains or delayed deliveries.
Employers who implement these safety measures and diligently adhere to them will not only improve their workplace and avoid disruptions, they will reduce their exposure to liability in the event that an employee, customer or vendor contracts COVID-19.

Conkle, Kremer & Engel attorneys will continue to monitor and advise clients about the legal implications of the COVID-19 pandemic, and how businesses can navigate these uncertain times.

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