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Archive for the ‘Commercial Liability’ Category

Asking Applicants’ Salary History Likely to be Prohibited

Posted on: September 15th, 2017

By: Jennifer L. Sommer

BLOGAB 168, likely to pass into California law in 2017, would ban California employers from asking job applicants about their salary history. The bill would apply to all employers, including state and local governments. However, only private employers would have to provide applicants with the relevant position’s pay upon reasonable request.

Rationale

Proponents say the law is intended to prevent the perpetuation of historical patterns of gender bias and discrimination, where low starting salaries tend to follow the female worker throughout her lifetime. Additionally, proponents say the pay gap follows women even after they leave the workforce, where one observes the impact in lower retirement benefits as well as lower benefits for other programs based on earnings.

The bill’s supporters cite to numerous studies finding disparities in earnings between men and women in the workplace over the last fifty years. In 1963, women who worked full-time year-round made an average of 59 cents for every dollar earned by a man, according to the American Association of University Women (AAUW). Today, women working full-time in the United States typically are paid 80 percent of what men are paid, a gap of 20 percent. (The Simple Truth about the Gender Pay Gap, 2017 Edition, AAUW). The wage gap is even larger for women of color. According to the National Partnership for Women & Families, among women who hold full-time, year-round jobs in the United States, African American women are typically paid 63 cents for every dollar paid to white men, while Latinas are paid 54 cents for every dollar. Asian women are paid 85 cents for every dollar paid to white men, however, some ethnic subgroups of Asian women are paid far less. (America’s Women and the Wage Gap, National Partnership for Women & Families, April 2017)

According to proponents, closing the gender wage gap starts with barring employers from asking questions about salary history so that previous salary discrimination is not perpetuated.

Similar laws in other jurisdictions

In 2016, Massachusetts and Philadelphia enacted laws prohibiting employers from asking job applicants about their salary history. In 2017, New York City and Puerto Rico passed similar laws. In California, San Francisco is currently considering Ordinance No. 170350 which would ban employers from considering the current or past salary of an applicant in determining what salary to offer and from asking applicants about their current or past salary.
Opposition

Opponents of AB 168 include the California Chamber of Commerce and trade groups, who say the law is unnecessary in view of existing law, which already bans California employers from gag orders preventing the employee from disclosing his or her wages (Cal. Labor Code §232), or for paying rates less than the rates paid to employees of the opposite sex for substantially similar work (Cal. Labor Code §1197.5(a)

Further, AB 1676 was enacted in 2016, providing that prior salary cannot, by itself, justify any disparity in compensation under the bona fide factor exception in the existing Equal Pay Act law. Existing California law, however, does not prohibit employers from inquiring about prior salary information.

Specific provision

The specific provisions, if passed, would:

1) Prohibit a California employer, orally or in writing, personally or through an agent, from seeking salary history information, including compensation and benefits, about an applicant for employment.

2) Require a California employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

3) Apply to all California employers, including the state and local government employers and the Legislature.

4) Not apply to salary history information that is disclosable to the public pursuant to specified federal and state law.

For additional information related to this topic or other business matters you may contact Jennifer L. Sommer from the law firm of Freeman, Mathis & Gary, LLP at [email protected].

Advancements in Medical Device Technology Prompts FDA Guidance Document for Manufacturers

Posted on: September 8th, 2017

By: Michael P. Bruyere and Samantha Skolnick

medical-technology[1]From operating rooms to a local pediatrician office; we know that medical devices have altered the medical field in a significant way. As technology, has improved; making our homes smarter and allowing our cars to essentially drive themselves; medical devices have seen great technological advances. Now devices can communicate with each other and exchange information even if they are from different manufacturers. Interoperable medical devices are defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) as devices that can exchange and use information through an electronic interface with another medical/nonmedical product, system, or device. Interoperability is essentially the means in which medical devices communicate and interact with each other. Yet, errors such as inconsistent units of measurement between the devices prompted the FDA to step in with guidance for the manufacturers.

The FDA issued its final guidance and recommendations on interoperability to ensure the safety and reliability of the communication between medical devices. The 21- page document, released on September 6, 2017, focuses on considerations that ought to be involved in the advancement and overall design. There were also suggestions for the material to be included in premarket submissions and labeling of devices. The guidance directly highlights that interoperability should be an objective for manufacturers; verification, validation and risk management activities should be taken; and manufacturers should be specifying the relevant features in a user- friendly way.

The FDA opines that manufacturers should perform a risk analysis and perform testing that considers; the perils that could be linked to interoperability, who the users of the devices may be, misuses that would be reasonably foreseeable, and a combination of foreseeable events that could result in an overall dangerous situation. The FDA advises that manufacturers should keep in mind the diverse users while designing the device and in formulating the instructions; since such considerations may affect the limitations on the device or the user. The FDA even suggests developing entirely different instructions for different users. The guidance document states that interoperable systems should sustain basic safety and key performance during normal and fault conditions. The manufacturers should be designing an interoperable medical device that can appropriately allay risks connected with a wide range of potential error scenarios. The guidance document also suggests that the devices endure a sufficient level of testing to prove that the interactions on the electronic interface are performing in the appropriate manner. The testing ought to be based on the purpose of the interface and should comply with the planned specification. Another general takeaway from the guidance document is that difficulties or misapplication of the devices can be curtailed by making the functional, performance, and interface standards readily available to all users.

Simply put, the goal is to make sure these devices are communicating in a way that ensures the safety of the patient and the operator of the devices. Manufacturers who are submitting applications up to 60 days after the publication of the guidance will not be required to comply with the recommendations. Yet, the agency is willing to review any information submitted to them regarding interoperability. The guidance document is not legally binding, but it highlights the impact of technological advancements on medical devices and the safeguards that should be in play. And as we read the guidance document on our latest smartphone or tablet, we are reminded of the tremendous impact technology has on our lives and continues to have.

If you have any questions or would like more information, please contact Michael Bruyere at [email protected] or Samantha Skolnick at [email protected].

SEC Issues Risk Alert on the Cybersecurity Practices of Registered Broker-Dealers, Investment Advisers, and Investment Funds.

Posted on: August 11th, 2017

By: Jennifer Lee

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The U.S. Securities and Exchange Commission (“SEC”) is becoming increasingly focused on cybersecurity issues in recent years as data breaches and ransomware attacks become more frequent and wide-spread across all industries. The most recent Risk Alert, issued on August 7, 2016 by the SEC’s Office of Compliance Inspections and Examinations (“OCIE”), shows that cybersecurity continues to be a high priority for the SEC in 2017.

The Risk Alert was based on an examination of the cybersecurity policies and practices of 75 broker-dealers, investment advisers, and investment funds over a nine-month period, from September 2015 to June 2016. The examinations focused on firms’ written policies and procedures regarding cybersecurity, including whether such policies were actually implemented and followed.

The 6-page report found that although most firms had cybersecurity policies in place, such policies were often too general and vague, as they did not articulate specific procedures for implementing the policies or examples of how employees can apply the policies in their daily work. In addition, even when firms had specific cybersecurity protocols in place, their actual practices were much more lax and did not reflect their stated policies and procedures. For example, firms often had policies requiring all employees to complete cybersecurity awareness training. However, they did not have a mechanism in place to enforce such requirements. The Risk Alert also pointed out that some firms were using outdated operating systems that were no longer supported by security patches and not taking measures to address the results of any penetrating testing.

In light of the findings, the report listed specific measures firms can take to ensure that their cybersecurity practice are “robust,” including:

  • Creating and maintaining an inventory of data and information, including classification of the risks of the disclosure of each category of data or information and business consequences in the event of such disclosures;
  • Tracking access and requests for access to data and information;
  • Following a regular schedule of system scans and updates, including security patches;
  • Establishing and enforcing controls concerning firm network and equipment, including protocols with respect to personal devices on firm networks; and
  • Requiring mandatory employee training on cybersecurity issues.

Cybersecurity incidents are a growing and costly problem for the financial services industry, and they do not appear to be going away anytime soon. The SEC has picked up on this and has begun to dedicate more resources to cybersecurity enforcement. In fact, last year, the SEC brought charges against Morgan Stanley Smith Barney LLC (“MSSB”) following a data breach involving customer data for failure to adopt written policies and procedures reasonably designed to protect customer records and information. MSSB, a dually registered broker-dealer and investment adviser, settled the matter by agreeing to a censure and a $1 million fine. With the release of the August 7, 2017 Risk Alert, it seems more likely now, more than ever, that firms will be held accountable for cybersecurity incidents, including data breaches and ransomware attacks, if they fail to implement the recommended measures and protocols contained in the Risk Alert.

However, SEC enforcement actions are not the only thing that broker-dealers and investment advisers need to worry about. As the public becomes more aware of cybersecurity issues, data breaches and ransomware incidents will result in the filing of customer claims. This may prove to be problematic as a single incident can affect thousands of customers, so a broker-dealer or an investment adviser may find itself trying to fight off thousands of individual actions or face a handful of actions involving a large number of customers, similar to a class action or a mass tort case.

To reduce the risk of an SEC enforcement action or customer actions based on cybersecurity incidents, broker-dealers and investment advisers should ensure that they are in compliance with SEC regulations and guidelines regarding cybersecurity, including but not limited to Regulation S-P, Exchange Act Rule 13n-6, and Exchange Act Rule 15c3-5—both on paper and in practice. Firms should also proactively implement any recommendations contained in OCIE’s Risk Alerts to the extent that they have not already.

If you have any questions regarding your firm’s compliance with SEC cybersecurity regulations or cybersecurity litigation in general, please contact the writer, Jennifer Lee, at [email protected].

Georgia’s New Garnishment Code

Posted on: November 10th, 2016

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By: A. Ali Sabzevari 

To collect money owed, judgment-creditors must typically file a garnishment action and serve the garnishee, such as an employer or financial institution, and the judgment-debtor.  The State of Georgia has a new garnishment code that took effect in May, 2016 that governs these garnishments.

Senate Bill 255 was passed by the Legislature to repeal and replace the existing garnishment code in Georgia.  This bill was drafted in response to a Georgia federal court finding that the existing garnishment code was unconstitutional in part because it did not provide adequate protection for claims of exempt funds.

The following are of some of the key changes in the new garnishment code:

  • There have been changes to garnishments filed by judgment creditors against financial institutions.  Under the new code, the applicable coverage period for a financial institution garnishment has been reduced from 30 days to just 5 days. Non-financial institution garnishments still have a 30 day coverage period.
  • The time-period for continuing wage garnishments is 180 days with the ability to refile.
  • The answer deadline for a financial institution has been reduced to 15 days after service.
  • The new code clarifies funds that are exempt and explains the process for recovery if taken improperly.
  • The pre-judgment garnishment code (O.C.G.A. § 18-4-40 through 18-4-48) has been repealed and prejudgment garnishment is no longer a remedy in Georgia.
  • When no claim has been filed and no traverse has been filed within 20 days after the garnishee files an answer (as opposed to 15 days under the old code), the judgment-creditor can apply for the funds deposited into the registry of the court.
  • Finally, the new code outlines what a judgment debtor should do if exempt money has been taken and also requires that a hearing be held within 10 days after an exemption claim is filed.

The new garnishment code contains many other changes that apply to judgment-creditors, garnishees, and judgment-debtors.  The attorneys at Freeman Mathis & Gary, LLP can help you navigate and streamline the process for garnishments and disputes, including those pertaining to exempt funds.

For more information regarding garnishments in Georgia, or if you have been served with or need to serve a garnishment, please contact A. Ali Sabzevari at [email protected] or 770.303.8633.

Higher Screening Standards Needed to Prevent Fentanyl Misappropriation in Hospitals

Posted on: November 4th, 2016

remigho-syringeBy: Robyn Flegal

A disturbing trend is on the rise. Hospital employees are misappropriating drugs intended for patients. The drug of choice is fentanyl, which has been used as a prescription painkiller since the 1960s, but is up to fifty times more powerful than heroin and up to 100 times more potent than morphine.[1] In some areas of the United States, deaths resulting from fentanyl overdoses are more prevalent than deaths resulting from heroin overdoses.[2]

Several newsworthy cases illustrate this trend toward fentanyl misappropriation by hospital staff. A nurse in Colorado is suspected of misappropriating fentanyl intended for patients after she was found with fentanyl doses exceeding the amounts nurses typically need for their patients.[3] A month before, in another Colorado hospital, a surgical technician was arrested for allegedly tampering with “a syringe containing fentanyl citrate by removing the syringe containing [fentanyl] and replacing it with a similar syringe containing ‘other substances.’”[4] Other hospital employees, including surgical technicians,[5] emergency medical technicians,[6] and pharmacy technicians[7] have been investigated for similar circumstances of fentanyl misappropriation.

Hospitals should be aware of this dangerous trend and should limit employee access to fentanyl. Hospitals should implement thorough screening procedures and background investigation before hiring employees who will have access to fentanyl. The surgical technician mentioned above had previously been fired after testing positive for a controlled substance, but he answered “no” on his job application as to whether he had ever been fired from employment as a surgical technician.[8] It is important to be aware, however, that even the most thorough background screening may not prevent fentanyl misappropriation in every instance. One of the pharmacy technicians under investigation for replacing fentanyl with saline solution passed a criminal background check and his reference check did not raise any red flags.[9]

[1] Katharine Q. Seelye, Heroin Epidemic is Yielding to a Deadlier Cousin: Fentanyl, N.Y. Times, March 25, 2016, http://www.nytimes.com/2016/03/26/us/heroin-fentanyl.html?_r=0.

[2] Id.

[3] Noelle Phillips, Nurse Accused of Stealing Fentanyl from Summit County Hospital, Denver Post, March 19, 2016, http://www.denverpost.com/2016/03/19/nurse-accused-of-stealing-fentanyl-from-summit-county-hospital/.

[4] Elizabeth Hernandez, Feds Arrest Swedish Medical Surgical Tech Accused of Stealing Drugs, Denver Post, February 16, 2016, http://www.denverpost.com/2016/02/16/feds-arrest-swedish-medical-surgical-tech-accused-of-stealing-drugs/.

[5] Lane Lyon, Former Rose Hospital Employee Admits to Needle Swapping, July 3, 2009,  http://www.thedenverchannel.com/news/former-rose-hospital-employee-admits-to-needle-swapping.

[6] U.S. Attorney’s Office, Raymond Man Sentenced for Diverting Fentanyl at Exeter Hospital, August 29, 2014,  https://www.fbi.gov/contact-us/field-offices/boston/news/press-releases/raymond-man-sentenced-for-diverting-fentanyl-at-exeter-hospital.

[7] KSN-TV, Pharmacy Tech Swapped Fentanyl for Saline Solution, Hospital Says, October 27, 2016,  http://ksn.com/2016/10/27/pharmacy-tech-swapped-fentanyl-for-saline-solution-hospital-says/

[8] Elizabeth Hernandez, Feds Arrest Swedish Medical Surgical Tech Accused of Stealing Drugs, Denver Post, February 16, 2016, http://www.denverpost.com/2016/02/16/feds-arrest-swedish-medical-surgical-tech-accused-of-stealing-drugs/.

[9] KSN-TV, Pharmacy Tech Swapped Fentanyl for Saline Solution, Hospital Says, October 27, 2016,  http://ksn.com/2016/10/27/pharmacy-tech-swapped-fentanyl-for-saline-solution-hospital-says/