NLRB Sets the Stage for Increased Scrutiny of Work Rules and Employee Handbooks

8 3 Advisory Nlrbsetsstageforincreasedscrutiny Linkedin

In a troubling decision released yesterday, the National Labor Relations Board (the Board) issued a new standard for reviewing workplace rules that do not expressly prohibit activity protected under the National Labor Relations Act (the Act) and reversed the frameworks set forth in the 2017 Boeing case. The new standard evaluates whether a reasonable worker who is “economically dependent on the employer” would interpret the rule to prohibit organizing or engaging in concerted activities. This new standard applies to all work rules and employee handbooks in both unionized and non-unionized workplaces.

A work rule is unlawful under the Act when the rule has a reasonable tendency to chill employees’ exercise of their rights under the Act. Under the new Stericycle standard, an administrative law judge (ALJ) or the Board will interpret the rule from the perspective of an employee who is economically dependent on the employer. Any ambiguity in the rule will be construed against the employer. If an economically dependent employee could reasonably interpret the rule to restrict or prohibit concerted activity under Section 7 of the Act—even if a different, reasonable and lawful interpretation is possible—the rule is presumptively unlawful and invalid. The employer’s business reason for adopting the rule, for example, safety or protection of confidential information, does not matter. If the rule is found to be presumptively unlawful, the employer’s only defense would be to establish that that the its “legitimate and substantial business interest” could not be accomplished by a more narrowly tailored rule.

In light of the decision in Stericycle, employers should review their employee handbooks, policies, procedures, employment agreements and other workplace rules to ensure that such documents are narrowly tailored to effectuate the purpose of the intended rules without creating an opportunity for argument that the rule has a chilling effect on concerted activity. 

Please contact your Varnum attorney if you have any questions or for assistance with reviewing employee handbooks, policies, procedures, employment agreements and other workplace rules.

H-1B Cap Second Random Selection, Revised Form I-9 and ETIAS Implementation

H-1B Lottery

U.S. Citizenship and Immigration Services (USCIS) announced it will conduct a second lottery to reach FY 2024 numerical cap for H-1B registrations filed in March. We will notify clients of selection results as soon as they are completed.

Revised Form I-9

On August 1, 2023, USCIS will publish revised Form I-9 and end COVID-19 flexibilities. E-Verify employers qualify for new DHS procedure to remotely examine employees’ identity documents. All employers must utilize new Form I-9 starting November 1, 2023, that has the following updates:

  • Shorter in length
  • May be completed on tablets and mobile devices
  • Separates Preparer/Translator Certification into standalone supplement
  • Revises list of acceptable documents
  • Includes new checkbox for employers examining documents remotely

ETIAS Implementation

Expected implementation of European Travel Information and Authorization System (ETIAS) online visa waiver system is early 2024. ETIAS will require individuals from certain visa-exempt countries, including US citizens, to register online before visiting more than 25 countries in Europe. Once ETIAS is granted, US citizens will receive visa-free entry for a maximum of 90 days within any 180-day period. ETIAS registrations are valid for three years or until registered passport expires.

Please contact your Varnum immigration attorney with questions.

SECURE 2.0: Important Changes to Roth Accounts

SECURE 2.0 has changed dozens of benefits plan rules. Among these are changes to when and how Roth accounts are used. Roth account are retirement accounts, in a 401(k) plan or an IRA, to which after-tax money is contributed and no income tax is paid on distributions, including earnings (as opposed to “traditional” 401(k) or IRA accounts, which accept pre-tax contributions, but for which distributions, including earnings, are taxed when received). These changes have increased the required and permitted uses of Roth contributions.

Matching Contributions

Plan sponsors may decide whether to offer participants the option to designate employer matching contributions as Roth contributions, rather than only as a traditional (pre-tax) match. This option also applies to matching qualified student loan payments (if the employer elects to do so) and matching contributions to a 457(b) plan. This is an optional provision. If a plan sponsor decides to offer Roth matching contributions, it will need to amend its plan. If implemented, matching contributions must be fully vested at all times, so employers should carefully consider whether to elect this option. Plan sponsors may elect to implement this provision effective any time on or after December 29, 2022.

Catch Up Contributions

Catch up contributions are 401(k) deferrals in excess of the regular elective deferral limits that may be made by participants who are over age 50. Plans must now require participants who made at least $145,000 (adjusted annually after 2024) in the previous year to designate catch up contributions, if any, as Roth contributions. Plan sponsors may also elect to require participants who made less than $145,000 (as adjusted) make catch up contributions as Roth contributions. Before SECURE 2.0, catch up contributions could be made as traditional (pre-tax) contributions or Roth contributions, depending on the plan. This change is effective for plan years beginning on or after January 1, 2024. Plan sponsors will need to coordinate with legal counsel and plan administrators to ensure this change is implemented properly.

Pre-Death Distributions

SECURE 2.0 makes several changes to required minimum distributions (RMDs). Effective January 1, 2024, plans are no longer required to make RMDs for Roth 401(k) accounts before the participant’s death.

Conclusion

For plans that do not currently permit Roth contributions, now may be a good time to reassess whether broad inclusion of Roth contributions should be added to the plan. Roth contributions are essentially required for any plan that offers catch-up contributions, and may be desirable for other plans as well. Employers should also monitor changes in this area, as there are industry groups requesting guidance, relief during the transition and delayed effective dates for implementing the required changes.

Varnum will continue to provide updates throughout the year highlighting other provisions. Employers are encouraged to contact their Varnum Employee Benefits Attorney with any questions.

Michigan Supreme Court Expands Parental Rights of Same-Sex Parents

7 24 Advisory Parentalrightssamesexparents Linkedin

On July 24, 2023, the Michigan Supreme Court (“the Court”) issued a 5-2 ruling resulting in the expansion of parental rights for LGBTQ+ parents in the state. In Pueblo v Haas, the Court considered whether an unmarried, same-sex parent can seek custody and parenting time over a non-biological child conceived during a decades-long domestic partnership prior to the 2015 decision in Obergefell v. Hodges which legalized same-sex marriage at a federal level.

The central legal argument before the Court concerned Michigan’s “equitable parent doctrine,” which allows non-biological parents the ability to petition the courts for custody and parenting time over their children if they were previously married. Plaintiff Pueblo argued that the Court should narrowly extend the doctrine to include same-sex couples who were prohibited from marrying by now-overturned state law; the Court agreed. “The children of same-sex partners bear no lesser rights to the enjoyment and support of two parents than children born to married opposite-sex parents,” Justice Megan Cavanagh wrote in the decision. “Justice does not depend on family composition; all who petition for recognition of their parental rights are entitled to equal treatment under the law,” Cavanagh wrote.

The Court’s two conservative justices, David Viviano and Brian Zahra, dissented. Justice Zahra cited “far-reaching ramifications,” claiming that the Court’s decision would be used by unmarried same-sex couples pre-Obergefell to petition the courts for “property division, spousal support and any other traditional areas of domestic-relations law that accompany a divorce.”

As a result of the ruling, an unmarried same-sex parent may now petition courts for custody and parenting time under the equitable parent doctrine provided proof is established that marriage would have occurred had it been legal prior to Obergefell. Therefore, plaintiff Pueblo can now petition a lower court for custody and parenting time.

Varnum’s full-service Family Law Team represents parties in all manner of sensitive disputes and parenting matters; please contact any member of our team to learn more.

Primer on Fines and Suspension in Covenant Enforcement

7 24 Advisory Condohoafinesenforcement Linkedin

Enforcing violations in a community association can be cumbersome, contentious and unneighborly. Depending on the nature and severity of the violation, the association may be able to exercise self-help and cure a violation such as overgrown grass. Alternatively, in severe situations, the association may be forced to pursue an emergency injunction.

The most common enforcement mechanism is the use of fines and suspensions. Although the idea is to provide a simple “in-house” remedy to avoid clogging the court dockets with disputes over minor violations, the reality is that the process to levy a fine or suspension can seem daunting. This advisory is intended to provide a basic understanding of the fining process and recommendations to utilize this remedy effectively and properly.

1. The Violation Must Be “Ripe” 

Despite the severity or frequency of a violation, community associations may be required to provide warnings or cure opportunities before imposing fines and suspensions. Although the Florida Statutes do not require a community association to provide one or more warning letters, many covenants or internal enforcement policies self-impose a requirement to provide a warning. Many communities adopt enforcement policies or amend their governing documents to provide owners with one or two warning letters before the association will impose fines or suspensions.

Although this is good intentioned, the association may be precluded from pursuing a fine for a serious violation. For example, if an owner drives 60 mph through the community, it may not be enforceable if the association’s internal policy requires 10 days to cure a violation. When the car eventually slowed down, the violation was arguably cured. Likewise, if a tenant hosts loud parties late into the night every two weeks, the violation may be cured every night when the party ends.

Thus, the first recommendation is to review any internal policies and procedures to make sure the violation is ripe. If the community has self-imposed restrictions such as providing a warning or cure opportunity, it is recommended that the Board either remove these requirements or add a provision to allow the Board to skip the warning and cure requirements when there is a severe or egregious violation requiring immediate action.

2. The Board Must Vote

After the violation is ripe, the Board must vote to accomplish three tasks. First, the Board must vote to determine that a violation occurred. Second, the Board must vote to determine the number of dollars per day of the violation. Third, the Board must vote to determine the number of days to be fined at the daily rate determined above. Likewise, for a suspension, the Board must vote to determine the number of days of a suspension. The Board is not required to provide any special notice to the offending owner other than its normal Board meeting and agenda requirements.

It seems arduous to have a Board meeting to levy fines of $20 every time, for example, a neighbor leaves out their trash cans. As a result, many communities adopt a policy which delegates authority to a specific person or group to carry out the three tasks listed above. The resolution could delegate authority to the property manager or an office to make these initial determinations. In addition, the Board could adopt a pre-determined schedule of fines for the most common violations. Together, this would avoid lengthy Board meetings to impose penalties for routine violations and still require a Board vote for unique or rare violations that would normally justify a discussion at the Board level.

3. An Impartial Hearing 

After the Board (or its authorized designee) determines the amount of the fine or suspension, the association must conduct a hearing with an impartial committee of community members. The hearing committee may not be connected to current directors or officers and is intended to act as a neutral and impartial jury of peers. The committee’s role is to vote to approve or disapprove the fine or suspension approved by the Board. The committee will often ask questions, review photos, e-mails and incident reports relative to the act giving rise to the hearing and allow the owner to present a defense.

Confusingly, both the homeowners association and condominium statutes have historically provided that an association is required to provide “an opportunity for a hearing.” This can be interpreted to mean that the association must provide a hearing whether it is requested by the owner or not, but this was not a settled issue, as some communities would only provide a hearing if the owner requested a hearing. 

Effective October 1, 2023, the Florida legislature amended Section 720.305 for homeowners associations to clarify that a hearing must occur before a fine is due and payable. Unfortunately, the same clarification was not adopted for Section 718.305 applicable to condominium associations. Nevertheless, it has always been my recommendation to schedule and conduct a hearing in all situations and irrespective of whether the owner requests a hearing.

4. Collection 

If the hearing committee approves the fine, it is due and payable five days after the association provides notice to the owner of the approved fine. If the owner refuses to pay the fine, the association’s collection efforts will depend on the amount of the fine and the language in the association’s governing documents.

Chapter 720 governing homeowners associations provides that a fine of $1,000 or more may become a lien against a home. This means fines less than $1,000 must be collected as specified in the association’s governing documents or through small claims court. It is also recommended that the Board review the governing documents because some older covenants will expressly state that fines may never become a lien against a home. Chapter 718 governing condominium associations does not authorize fines of any amounts to become a lien against the condominium unit.

Generally, the association should work with its legal counsel to ensure that the Board’s goals and procedures align with the statutes and the association’s governing documents. If the Board desires to use fines and suspensions as a means of enforcement, the association should also be cognizant whether the Board pursued similar violations in the past and whether the Board is currently pursuing all known and similar violations to avoid a defense of selective enforcement. 

Please contact your Varnum attorney with any questions.

Understanding Michigan’s Adoption Process

7 6 Advisory Adoptionprocess Social Linkedin

The requirements for adopting a child in Michigan can vary depending on a variety of factors, such as the adoptive parent’s relationship to the child, the child’s age and the county where the adoptive parent and/or the child reside. Two of the most common types of adoption include adoptions by stepparents and direct placement adoptions.

Stepparent Adoptions

Stepparent adoption in Michigan allows a stepparent to legally adopt their spouse’s child or children from a previous relationship, granting them the same rights and responsibilities as a biological parent. To initiate the adoption process, the stepparent must meet certain eligibility criteria and follow specific legal procedures. It is important to note at the outset that the stepparent’s spouse (the child’s biological parent) must have sole legal custody of the child to be adopted. The stepparent adoption process can vary by county and individual circumstance; however, it generally includes the following steps:

Step 1: Consent or Termination of Parental Rights

Consent of the biological, noncustodial parent is usually required for a stepparent adoption. If the other biological parent does not consent to the adoption, the court may terminate their parental rights if it determines termination is in the child’s best interests. In order to “involuntarily” terminate the biological parent’s rights, the Michigan statute requires that:

  1. The parent, having the ability to support, or assist in supporting, the child, has failed or neglected to provide regular and substantial support for the child, or if a support order has been entered, has failed to substantially comply with the order for a period of two years or more before the filing of the petition, and
  2. The parent, having the ability to visit, contact or communicate with the child, has regularly and substantially failed or neglected to do so for a period of two years or more before the filing of the petition. Additionally, if the child is 14 years of age or older, the child’s consent to the stepparent adoption is required.
Step 2: Filing an Adoption Petition

Next, a petition for adoption must be filed in the circuit court of the county where the adoptive parent resides. The process of petitioning the court will vary depending on the county and whether the biological, noncustodial parent consents to, or contests, the adoption.

Step 3: Home Study

After the petition has been filed, an adoption agency or a court-appointed investigator will conduct a home study to assess the suitability of the stepparent’s home environment for the child. The home study process may vary slightly depending on the adoption agency or professional conducting it. The home study aims to ensure that the adoptive home will serve the best interests of the child and to help prospective adoptive parents prepare for the adoption journey.

Step 4: Adoption Hearing and Finalization

The court will then schedule an adoption hearing where the judge will review the information provided and make a determination regarding the adoption. If the court finds that the adoption is in the child’s best interests, a final adoption order will be issued, granting the stepparent full legal parental rights and responsibilities.

Direct Placement Adoptions

Direct placement adoption (also referred to as “parental consent adoption”) is the process by which prospective adoptive parents directly arrange the adoption of a child with the child’s birth parents or a legal guardian. The direct placement adoption process generally includes the following steps:

Step 1: Pre-Placement Assessment

The adoptive parents must undergo a pre-placement assessment, also referred to as a home study. The primary purpose of a pre-placement assessment is to evaluate the prospective adoptive parents’ readiness, suitability and ability to provide a loving and stable home for a child. The assessment aims to protect the best interests of the child and ensure they will be placed in a safe and supportive environment. These assessments must be conducted by a licensed adoption agency, and may include interviews, background checks and a home visit. Upon completion of the pre-placement assessment process, the adoption professional or agency will compile a comprehensive written report and will make a determination regarding the prospective adoptive parents’ suitability for adoption. This report will be provided to the court and the birth parent(s).

Step 2: Parental Consent and Agreement

The parent of the child must consent to voluntarily relinquishing all parental rights over to the court for placement of the child with a specific adoptive parent. Consent may be given after the child’s birth or during the pregnancy, depending on the circumstances. If the parent consents to the placement, they enter into a written placement agreement with the prospective adoptive parents, outlining the terms and conditions of the child’s placement.

Step 3: Temporary Placement and Supervision

Upon execution of the placement agreement and pre-placement assessment, the child may be temporarily placed with the adoptive parent(s), during which an adoption agency or an adoption attorney monitors the child’s well-being and the adjustment of all parties involved.

Step 3: Petitioning the Court for Formal Placement

Within 45 days of the temporary placement, the adoptive parents must file a petition for adoption in the circuit court of the county where they reside. The petition includes information about the child, the adoptive parents and the circumstances of the adoption.

Step 4: Adoption Hearing and Finalization

The court will then schedule an adoption hearing where all parties involved, including the adoptive parents, birth parents and the child (if of appropriate age), may be required to attend. The judge will review the information provided and make a determination regarding the adoption. If the court finds that the adoption is in the child’s best interests, a final adoption order will be issued, granting the adoptive parents full legal parental rights and responsibilities.

Conclusion

It is important to note that these summaries provide a general overview of the stepparent and direct placement adoption processes in Michigan. The specific requirements and procedures may vary depending on the circumstances and the county where the adoption is taking place.

Varnum’s Family Law Team can help guide you through the often-complicated adoption process. Please contact your Varnum attorney with any questions.

2023 summer associate Cole Anderson contributed to this advisory. Cole is currently a student at Wayne State University Law School.

NCAA Issues NIL Edict: Play by Our Rules, Not State Laws

7 17 Advisory Ncaanilmemo Social Linkedin

A new era of strict enforcement is on the horizon as the NCAA takes a firm stand against Name, Image and Likeness (NIL) violations spanning schools nationwide. Stan Wilcox, the NCAA’s Executive Vice President of Regulatory Affairs, recently issued a memo to schools, making it clear that any violation of NCAA rules, regardless of what state laws permit, will face consequences.

The memo arrives at a time when several states within the Southeastern Conference have either implemented or are establishing laws that allow student-athletes to receive NIL compensation through their schools’ fundraising entities. The NCAA’s response signals a significant shift in the enforcement landscape, setting the stage for potential consequences in the realm of collegiate athletics.

The NCAA’s strict enforcement of its rules places schools in the crossfire between NCAA policies and state laws, with 32 states having already introduced their own NIL regulations for public education institutions. Many of these state laws contain provisions that curtail the NCAA’s authority to enforce its own NIL policy. However, the NCAA’s memo makes a resolute statement, asserting that voluntary membership in the organization renders state laws irrelevant if they conflict with its membership guidelines. The memo also emphasizes that boosters must not engage with recruits to discuss potential NIL opportunities during the recruiting process.

In the evolving era of college athletics, the NCAA is continuing to prioritize enforcement of its bylaws, and Wilcox’s memo further emphasizes that the NCAA will issue penalties to entities that violate its rules, regardless of state laws. As schools nationwide grapple with the complexities of NIL regulations, the discordance between state laws and NCAA guidelines remains uncertain. Varnum LLP will continue to monitor these developments.

2023 summer associate Dilan Kama contributed to this advisory. Dilan is currently a student at Wayne State University Law School.

Download Varnum's State-by-State NIL Compliance Playbook

Cover of Varnum's State-by-State NIL Compliance Guide PlaybookTo aid individuals, schools and collectives with the often inconsistent and rapidly developing legislative and executive actions of the states, Varnum’s dedicated team of NIL attorneys created an all-inclusive, state-by-state compliance playbook. Learn more and download your free copy: varnumlaw.com/NILguide

Michigan Supreme Court Modifies Requirements for Blanket Purchase Order Language

7 14 Advisory Misupremecourtblanketpurchase Social Linkedin

Blanket purchase orders, commonplace in the automotive industry, have previously been interpreted by Michigan State Courts as binding contractual agreements despite only very loosely specifying a quantity term. However, on July 11, 2023, the Michigan Supreme Court clarified the necessary specificity to satisfy the statute of frauds for blanket purchase orders. Blanket purchase orders, the most common type of orders within Michigan’s automotive industry, are purchase orders that do not specify a specific quantity term. Overruling previous caselaw at the appellate level, the Michigan Supreme Court in MSSC, Inc. v. Airboss Flexible Products Co. held that the word “blanket” does not provide enough specificity to satisfy the statute of frauds quantity requirement, possibly rendering many current contracts unenforceable beyond a release-by-release commitment.[1]

Previously, the Michigan Court of Appeals in Great Northern Packaging, Inc. v. Gen. Tire and Rubber Co., held that the term “blanket order” expresses a quantity term sufficient to satisfy the statute of frauds, which requires contracts for the sale of goods to be in writing.[2] However, the Michigan Supreme Court held in MSCC, Inc. that a contract must specify some amount of product that is required to be purchased or sold to satisfy the statute of frauds.[3] Therefore, without further specificity beyond “blanket,” a contract could be rendered unenforceable. This decision is important for suppliers, particularly in the automotive industry where these contracts are commonplace, as imposing greater quantity specificity helps provide increased certainty to suppliers and could shift bargaining power, as many of the blanket purchase orders have been binding for extensive periods of time. Typically, a contract is formed on a release-by-release basis, and the blanket purchase order merely provides the general terms applicable once a release is issued and accepted.

Notably, in reaching its conclusion, the Court contrasted the language of the purchase order in MSSC with the purchase order at issue in Cadillac Rubber & Plastics, Inc v Tubular Metal Sys, LLC, which gave the buyer the option to purchase a quantity between one unit and 100% of its requirements, a buyer-friendly term that is included in many auto industry supply agreements.[4] The Supreme Court noted that the Court of Appeals found this language in Cadillac Rubber to state a quantity term, and the absence of similar language in MSSC suggested that the present contract lacked a quantity term: “[I]n Cadillac Rubber, the Court found the existence of a quantity term—’a quantity between one part and 100%’—which therefore allowed it to use evidence of past practice (or parol evidence) to discern the parties’ intent….  Here, the documents between MSSC and Airboss do not contain such a quantity term.”[5]  The Court then explained in a footnote that the supplier had asked the Court to overrule Cadillac Rubber and find that this type of language was not sufficient to state a quantity term, but the Court declined to do so since that issue was not properly before the Court and the issue could be decided “another day.”[6]

Varnum LLP previously litigated this issue before the United States District Court for the Northern District of Ohio in Revere Plastic Systems, LLC v. Plastic Plate, LLC. In this case, Revere asserted Plastic Plate materially breached its agreement when it refused to continue shipping absent a price increase.[7] However, the blanket purchase order contained no quantity or duration term and set only the general terms and conditions with each contract being formed by a release.[8] Revere argued under the terms of the blanket purchase agreement that Plastic Plate had an ongoing contractual obligation to continue shipping, an argument frequently utilized by buyers in the context of blanket purchase orders.[9] Agreeing with Varnum’s argument, the court, observing that a contract for sale of goods requires a quantity term,[10] held that there was no contract to enforce until Revere issued releases for “firm” quantities.[11]

The Michigan Supreme Court’s decision in MSSC, Inc. v. Airboss Flexible Prods. Co. impacts purchasers and suppliers with ongoing blanket purchase orders that do not specify quantity terms. Parties to these agreements should be cognizant of how this decision impacts their ongoing blanket purchase orders moving forward to evaluate their obligations and determine whether the quantity terms within the contracts contain the necessary specificity to make the contracts enforceable. In MSSC, Inc. v. Airboss Flexible Prods. Co., the Michigan Supreme Court explicitly states that “quantity is the only essential term required by the statute of frauds,” an important signal that current blanket purchase orders may require greater specificity if the parties hope to ensure their enforceability moving forward.[12] For further questions and guidance on these issues, please contact your Varnum attorney for assistance.

2023 summer associate Brady Diller contributed to this advisory. Brady is currently a student at Washington University School of Law.

[1] MSSC, Inc., v. Airboss Flexible Products Co., No. 163523, 2023 WL 4476721, at 3 (July 11, 2023)

[2] Great N. Packaging, Inc. v. Gen. Tire and Rubber Co., 154 Mich.App. 777, 787 (1986)

[3] MSSC, Inc., v. Airboss Flexible Products Co., No. 163523, 2023 WL 4476721, at 11 (July 11, 2023)

[4]331 Mich App 416, 952 N.W.2d 576 (2020)

[5] MSSC, Inc., v. Airboss Flexible Products Co., No. 163523, 2023 WL 4476721, at *8-9 (July 11, 2023)

[6] Id. at n4.

[7] Revere Plastic Sys., LLC v. Plastic Plate, LLC, 509 F.Supp.3d 986, 996 (N.D. Ohio 2020)

[8] Revere Plastic Sys., LLC v. Plastic Plate, LLC, 509 F.Supp.3d 986, 1001 (N.D. Ohio 2020)

[9] Revere Plastic Sys., LLC v. Plastic Plate, LLC, 509 F.Supp.3d 986, 1000 (N.D. Ohio 2020)

[10] Revere Plastic Sys., LLC v. Plastic Plate, LLC, 509 F.Supp.3d 986, 996 (N.D. Ohio 2020)

[11] Revere Plastic Sys., LLC v. Plastic Plate, LLC, 509 F.Supp.3d 986, 1001 (N.D. Ohio 2020)

[12] MSSC, Inc., v. Airboss Flexible Products Co., No. 163523, 2023 WL 4476721, at 3 (July 11, 2023) (citing In re Frost Estate, 130 Mich. App. 556, 559 (1983)).