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FMG Law Blog Line

Archive for April, 2017


Posted on: April 19th, 2017

By: Kenneth S. Levine

On April 18, 2017, President Trump signed an Executive Order entitled “Buy American and Hire American.” In the “Hire American” portion of the order, the administration has directed USDOL, USDOJ, USCIS, and USDOS to review the current laws governing the H-1B program and develop and suggest changes that afford priority to the most skilled and highest paid positions. The current H-1B visa program allows for the issuance of an H-1B visa upon a showing that the sponsored position is a professional position requiring a Bachelors degree and that the offered salary meets the current USDOL prevailing wage.

As a practical matter, this Executive Order does not confer any changes whatsoever to the H-1B visa program. The same regulations that were in effect prior to the issuance of the order remain in effect today.  Dramatic alterations to the H-1B program would have to be accomplished by way of formal bills introduced, debated and approved by Congress, and then signed into law by the President. One such bill was introduced by Senators Grassley and Durbin in January 2017 which aims to reform H-1B as well as L-1 visas. This bill remains in a legislative committee and has yet to advance.

For more modest changes to the H-1B visa program, the Trump administration would need to undergo the formal rulemaking process pursuant to the Administrative Procedures Act (APA). The rulemaking process involves the formal introduction of the proposed rule, a comment period to allow for input by interested stakeholders, followed by the issuance of the final rule in the Federal Register. The formal rulemaking process is arduous and quite lengthy. It is not anticipated that any new rules or regulations in the H-1B program would be fully implemented for at least 2 years.

While this Executive Order does not have any immediate impact on the ability of U.S. employers to sponsor foreign nationals for H-1B visas, it is abundantly clear that the administration will employ a decidedly higher level of scrutiny in all H-1B filings. The order further addresses the issue of fraud and abuse by directing that the above federal agencies scrutinize all visa programs to develop more reliable indicators of whether fraud or abuse is being perpetrated in a visa application. Therefore, it is incumbent upon U.S. employers and their immigration legal counsel to check, double check and triple check that H-1B petitions are thoroughly prepared and strictly adhere to the USCIS and USDOL regulations.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth S. Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected].

The SEC’s Authority Does Not End at the Border

Posted on: April 18th, 2017

By: Ze’eva R. Kushner

Companies with significant operations in the United States but offering securities in other countries should beware. After almost seven years of uncertainty, it finally has been determined by one court that the Securities and Exchange Commission’s (SEC) power to bring enforcement actions extends beyond the border to companies that market securities abroad to foreign investors, even if they do not have any securities listed or sold in this country, if they have substantial operations here.

Back in the summer of 2010, the Supreme Court and Congress got into a tussle over the extraterritorial application of federal securities laws. Prior to that point, courts permitted private plaintiffs and the government to bring extraterritorial claims under the federal securities laws based on whether significant wrongful conduct related to the transaction at issue occurred in the U.S. or whether wrongful conduct had had a substantial effect in the U.S.  However, this “conduct or effects” test was rejected by the Supreme Court in its Morrison v. National Australia Bank, 561 U.S. 247 (2010), opinion issued on June 24, 2010.  Instead, the Supreme Court instituted a new “transactional” test. This test hinges on the purchase or sale of the security at issue taking place in the U.S. or the security being traded on an American stock exchange. Consequently, the risk to companies of being subjected to enforcement actions by the SEC relating to offering securities abroad was reduced considerably.

Less than one month after Morrison, the Dodd-Frank Act was signed into law. Section 929(b) includes language that seemed to restore the “conduct and effects” test for government securities actions. Thus, the question arose of whether the more limited transactional test or the broader conduct and effects test was applicable to actions brought by the SEC. Until last month, courts had avoided deciding the issue.

The case SEC v. Traffic Monsoon, LLC, No. 2:16-cv-00832-JNP, 2017 WL 1166333 (D. Utah Mar. 28, 2017), resolved the issue in favor of the SEC being able to extend its reach by employing the conduct and effects test. Traffic Monsoon, targeted by the SEC, was an internet advertising company that sold advertising packages to members, 90% of which resided outside of the U.S. The SEC alleged the company was engaged in an illegal Ponzi scheme in violation of certain federal securities laws. The Court held that the Dodd-Frank Act superseded Morrison, thus making the conduct and effects test apply to the SEC’s extraterritorial securities actions. More specifically, the SEC’s allegations against Traffic Monsoon’s activities passed the conduct and effects tests because the company operated in the U.S. while allegedly defrauding investors abroad. Nonetheless, out of an abundance of caution, the court also found that it passed the transaction test given that the purchases were made over the internet and liability had been incurred in the U.S. to deliver the products to the buyers.

For any questions, please contact Ze’eva Kushner at [email protected].

Is Your Project On The List?

Posted on: April 12th, 2017

By: Scott C. Hofer

In a change to the Pennsylvania Mechanic’s Lien Law of 1963 the Pennsylvania Department of General Services has opened the State Construction Notices Directory, which is now online and ready to accept lien-related notices. Pennsylvania has joined a trend in several states where Owners of significant construction projects may file notices with the State/Commonwealth in an effort to cut-off the lien rights of suppliers of labor and/or materials.

If a Pennsylvania project costs a least $1.5 million the owner may file a Notice of Commencement prior to the start of any labor, work or materials on a project. This document puts all suppliers of labor and/or materials on notice that they must file a document giving notice of the furnishing of that labor and/or materials promptly after beginning to do so.  The Notice of Commencement is required to include the following: (1)the name, address and e-mail address of the (prime) contractor; (2) the name and location of the project (including the county); (3) a legal description of the property; (4) the tax identification number of the parcel(s) on which the project is located; (5)the name, address and e-mail address of the Owner; (5) surety and bonding information (if applicable); and (6) the identifying number assigned by the Department of General Services that was assigned concurrent with the filing the notice. Once the Notice of Commencement is properly filed the Owner must then post a copy of it in a conspicuous place at the property prior to the beginning of work and make sure that it remains posted until the work is completed.

Once the Owner has properly filed and posted a Notice of Commencement then any provider of labor and/or materials is required to file a Notice of Furnishing within 45 days of first providing work for, or delivering materials to, the project. If the provider of labor and/or materials fails to provide this notice within the timeframe required by the statute it loses its lien rights.

In addition to the required filings there are optional filings that may also be utilized. An Owner may file a Notice of Completion in an effort to establish an outside date for the filing of any lien claims.  A supplier of labor and/or materials may utilize a Notice of Nonpayment to inform the Owner, Owner’s agent, contractor acting as the Project agent or the subcontractor of the nonpayment. This filing is for information purposes but can be utilized to put pressure on the party responsible for payment.

Suppliers of labor and/or materials also need to know that the directory notices do not do away with any of the preconditions that already exist to perfect a lien. For instance, a subcontractor or supplier to the (Prime) Contractor must still file a Notice of Intent to File Mechanic’s Lien within the time required by the Lien Law to preserve the right to perfect a lien when it is finished in addition to filing a Notice of Commencement within 45 days of beginning.

It is unclear what effect this change will have long-term. While the change provides Owners a mechanism to cut off the lien rights of the unwary, it also provides the essential information that have often led to additional costs in lien filings (such as property search costs).  As a result, the law can trap the unwary but a time/cost-saver for the wise.  As of April 1, 2017 thirty-nine (39) projects had been registered.

For additional information related to this change in the Pennsylvania Mechanic’s Lien Law of 1963 and for advice regarding how to navigate the various laws that impact contractors in the Commonwealths of Pennsylvania and Virginia, the States of New Jersey and Maryland and the District of Columbia you can contact Scott C. Hofer of the law firm of Freeman, Mathis & Gary, LLP at (267) 758-6023 or [email protected].

FAQs: Medical Marijuana in Florida and Accommodations Under the ADA

Posted on: April 10th, 2017

By: Melissa A. Santalone

In this past election cycle, Floridians voted to approve Amendment 2 by a landslide, officially amending the State Constitution to allow the medicinal use of marijuana by those with “debilitating conditions,” free from criminal or civil liability under Florida law. The amendment went into effect on January 3, but questions remain as to exactly how this amendment affects the rights of employers and employees under the Americans with Disabilities Act (ADA).

Who can use medicinal marijuana under Amendment 2?

Amendment 2 provides for legal medicinal use of cannabis under Florida law by “qualified users,” or those with “debilitating conditions.”  “Debilitating conditions” have been defined as:

  • Cancer;
  • Epilepsy;
  • Glaucoma;
  • HIV;
  • AIDS;
  • Post-traumatic stress disorder (PTSD);
  • ALS;
  • Crohn’s disease;
  • Parkinson’s disease;
  • Multiple sclerosis; and
  • Other debilitating medical conditions “of the same kind or class or comparable to those enumerated, and for which a physician believes that the medical use of marijuana would likely outweigh the potential health risks for the patient.”

It remains to be seen how the potential vagueness in the definition of “other debilitating medical conditions” will play out in proposed state rules and regulations and in the courts. Under draft administrative rules recently proposed by the Florida Department of Health, the Florida Board of Medicine will have the final say as to what other conditions may qualify for use of medical marijuana.

Does the ADA mandate accommodations for the use of medical marijuana?

No. Title I of the ADA prohibits employers with 15 or more employees from discriminating against disabled employees and the case law suggests an employer may be required to provide reasonable accommodation for disabled employees that need to take medication during their shift.  However, there is a carve-out in the ADA for the use of ”illegal drugs,” which is defined by the federal Controlled Substances Act (CSA). As marijuana is still currently illegal under the CSA, the ADA does not require an accommodation be made for the use of medical marijuana.

Does Amendment 2 require employers to make accommodations for employees’ use of medical marijuana?

We currently don’t know with certainty, but we may be able to make a good prediction. Amendment 2 expressly provides that “[n]othing in this section shall require any accommodation of any on-site medical use of marijuana in any correctional institution or detention facility or place of education or employment, or of smoking medical marijuana in any public place.” The language is clear in that no accommodation must be made whatsoever for employees to use medical marijuana while on the job. However, Amendment 2 remains silent as to any accommodations to be made for off-site use, and the Amendment is too new for the Florida courts to have weighed in on this point.

The wording of Florida’s Amendment 2 mirrors that of the State of Washington, though, which is also silent as to accommodations for off-site use. In Washington, the courts have declined to interpret their law’s silence as a mandate that accommodations are to be made for off-site use of medicinal marijuana.  Given Florida’s relatively conservative jurisprudence, it seems likely that Florida courts will likely adopt a similar interpretation.

Moreover, Amendment 2 further provides that “[n]othing in this section shall permit the operation of any vehicle, aircraft, train or boat while under the influence of marijuana.” This language would support an employer’s denial of any accommodation for off-site use of medical marijuana by an employee required to operate vehicles or heavy machinery.

What developments in the law do Florida employers need to look out for?

The Florida Department of Health has been tasked with promulgating final administrative rules for Amendment 2 by July 2017. The Florida Legislature is also moving forward with bills delineating a regulatory scheme for Amendment 2 in this legislative session. These rules and laws, when enacted, may offer employers further guidance.

Florida employers seeking assistance in the development of ADA policies in light of the passing of Amendment 2 or those with accommodation questions should contact attorneys in FMG’s Tampa office.

Increased Scrutiny Measures to Detect H-1B Visa Fraud and Abuse

Posted on: April 7th, 2017

By: Agne Krutules

As thousands of the H-1B visa program application were filed on April 3, 2017, for the lottery for fiscal year 2018, the USCIS announced that it is implementing multiple measures to deter and detect H-1B visa fraud and abuse. Echoing President Trump’s campaign promises to put the American workers first, the USCIS stated that while the H-1B visa program should help U.S. employers recruit highly-skilled foreign nationals, when there is a shortage of qualified U.S. workers, it oftentimes hurts “too many American workers who are as qualified, willing, and deserving to work in these fields.” The USCIS announced that its priority is to combat fraud in employment-based immigration programs. In unveiling its “more targeted approach” to deter such fraud, the USCIS stated that when making site visits across the country to H-1B petitioners and the worksites of H-1B employees, it will primarily focus on:

  • Instances where USCIS cannot validate the employer’s basic business information through commercially available data;
  • H-1B-dependent employers, i.e., employers that have a high ratio of H-1B workers as compared to U.S. workers; and
  • Employers petitioning for H-1B workers who work off-site at another company or organization’s location.

According to the USCIS, these “targeted site visits” will allow it to focus its resources where fraud and abuse are likely to be prevalent. These visits will be random and unannounced nationwide. In addition, USCIS has established an email address, where individuals (American and H-1B workers who suspect they or others may be the victim of H-1B fraud or abuse) could submit tips, alleged violations, and other relevant information about the employers. The obtained information will be used for investigations and referrals to law enforcement agencies for potential prosecution. This measure could potentially subject any employer across the country to random inspections, as disgruntled employees could make accusations without any concrete evidence of H-1B fraud or abuse.

For any questions, please contact Agne Krutules at [email protected].