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February 19, 2018 Experts Corner

How manufacturers are faring under Trump, globally

Jeff White
By Jeff White

“Has US Manufacturing Been Unleashed?” That headline stopped me in my tracks when I glanced through the Industry Week email I received earlier this month. For anyone who reads trade publications, there is no shortage of provocative headlines about the state of manufacturing both domestically and globally.

One of the main promises of the Trump administration was that it was going to bring manufacturing jobs back to the United States and make it easier for those companies to succeed. It is still too early to tell if manufacturing has been “unleashed” both nationally and in Connecticut, but there are positive signs in the manufacturing jobs' numbers.

From a legal perspective, the outlook for manufacturing in 2018 is dominated by the intersection of state, federal and global issues that often squeeze manufacturers, which, regardless of size, live in a global marketplace.

Here are some issues to look out for:

1. Cutting red tape: deregulation

One of President Trump's goals is to streamline and minimize regulations. Among other things, Executive Order 13771 indicated that, for every regulation to be passed, two had to be identified for repeal.

One example of these efforts to deregulate involves OSHA. In 2016, OSHA enacted a regulation requiring that most employers submit injury and illness data to OSHA on an annual basis.

Recently, however, OSHA indicated that it was considering revising or repealing this new rule, instead only requiring employers to submit a summary of work-related injuries and illnesses (OSHA form 300A). This proposed change will likely lessen the regulatory burden on manufacturers and decrease the likelihood of enhanced enforcement.

Although there have been substantial efforts to curb regulation, the Trump administration and others have also proposed new rules that can impact manufacturers. These rules include the “Buy American” provisions for government purchases and also other proposals to restrict H-1B visas that allow skilled foreign workers to come to the United States.

For manufacturers that operate in the global marketplace, deregulation efforts by the U.S. government do not mean that manufacturers will avoid regulatory enforcement at the state and global levels. One prime example is the General Data Protection Regulation (GDPR), which is an effort by the European Union to harmonize data privacy laws across Europe.

GDPR is scheduled to be enforced in May 2018. Significantly, the laws can apply to U.S.-based companies particularly if they offer goods or services of EU data subjects. While most large publicly traded manufacturers have been preparing for months, even smaller manufacturers should note that the GDPR applies to companies that operate outside of Europe.

2. Compliance/global trade

Although the federal government under the current administration has made efforts to make it easier for manufacturers to do business, the burdens on companies to comply with global trade regimes remain significant for a couple of reasons.

First, many supply chain companies are required by contract to comply. Second, many of the laws noted below are major moneymakers for the government and are therefore likely to stay in place.

Foreign Corrupt Practices Act: In its simplest form, the FCPA was enacted to prevent bribes to foreign government officials to assist in obtaining or retaining businesses. In September, the U.S. government announced a nearly $1 billion FCPA settlement with the Swedish telecommunications company Telia. The total monetary payment in this global resolution makes it the largest such settlement to date.

False Claims Act: The False Claims Act (FCA) is a major civil enforcement tool used by the federal government to redress fraud causing monetary loss to the government — typically by recovering damages for the submittal of false or fraudulent claims for payment to the federal government.

In the 2016 fiscal year, the federal government recovered over $4.7 billion in FCA judgments and settlements. While in the manufacturing sector it most frequently affects government contractors, its reach can be broader and it is a statute that all manufacturers should be aware of. The FCA is often enforced by private citizens who can bring lawsuits on the government's behalf and share in the monetary recovery.

The U.S. Department of Justice recently instructed its prosecutors to consider dismissing meritless private citizen claims, which was a major development.

3. Sexual harassment claims, prevention

One of the common questions we are being asked by our clients is whether the Weinstein scandal (and the related fall-out) has led to an increase of sexual harassment claims against executives and other manufacturing personnel. Although every company is different, at this juncture, we can't say that we have seen a significant uptick in claims — particularly those involving allegations of sexual harassment from years before.

Significantly, however, we have seen more internal complaints and specific requests by employees that independent investigations be commenced. And, not surprisingly, there has been substantial interest in providing sexual harassment training.

Jeff White is a partner and chair of law firm Robinson+Cole's Manufacturing Industry Group.

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